AGREEMENT OF AFFILIATION AND MERGER
THIS AGREEMENT OF AFFILIATION AND MERGER ("Agreement") is made and
entered into effective as of the 30th day of March, 2001, by and between
FIRST FINANCIAL CORPORATION ("FIRST FINANCIAL"), FFC MERGER CORP ("MERGER
CORP"), and COMMUNITY FINANCIAL CORP. ("COMMUNITY").
W I T N E S S E T H:
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WHEREAS, First Financial is an Indiana corporation registered as a
bank holding company under the federal Bank Holding Company Act of 1956, as
amended ("BHC Act"), with its principal office located in Terre Haute, Vigo
County, Indiana; and
WHEREAS, Merger Corp is an Indiana corporation with its principal
office located in Terre Haute, Vigo County, Indiana and is a wholly-owned
subsidiary of First Financial; and
WHEREAS, Community is an Illinois corporation registered as a bank
holding company under the BHC Act, with its principal office located in
Olney, Richland County, Illinois, and is the sole shareholder of Community
Bank and Trust, N.A., a national banking association ("Bank"), and American
Bank of Illinois in Highland, an Illinois state banking institution
organized and existing under the laws of the State of Illinois; and
WHEREAS, it is the desire of First Financial and Community to
affiliate through a corporate reorganization whereby Community will be
merged with and into Merger Corp; and
WHEREAS, a majority of the entire Board of Directors of each of
First Financial, Merger Corp and Community have approved this Agreement,
authorized its execution and designated this Agreement a plan of
reorganization and a plan of merger.
NOW, THEREFORE, in consideration of the foregoing premises, the
representations, warranties, covenants and agreements herein contained and
other good and valuable consideration, the receipt and sufficiency of which
is hereby acknowledged, First Financial, Merger Corp and Community hereby
make this Agreement and prescribe the terms and conditions of the
affiliation of First Financial and Community and the mode of carrying such
merger into effect as follows:
SECTION 1
THE MERGER
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1.01. General Description. Upon the terms and subject to the
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conditions of this Agreement, at the Effective Time (as defined in Section 10
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hereof), Community shall be merged with and into and under the Articles
of Incorporation of Merger Corp ("Merger"). Merger Corp shall survive the
Merger ("Surviving Corporation") and shall continue its corporate existence
under the laws of the State of Indiana pursuant to the provisions of and
with the effect provided
in the Indiana Business Corporation Law, as amended. Upon consummation of
the Merger, Bank shall become a wholly-owned subsidiary of Merger Corp.
1.02. Name, Officers and Management. The name of the Surviving
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Corporation shall be "FFC Merger Corp." Its principal office shall be
located at One First Xxxxxxxxx Xxxxx, Xxxxx Xxxxx, Xxxxxxx 00000. The
officers of Merger Corp serving at the Effective Time shall continue to
serve as the officers of the Surviving Corporation, until such time as their
successors shall have been duly elected and have been qualified. The
directors of Community shall cease to be directors of Community as of the
Effective Time and shall not become directors of Merger Corp or First
Financial after the Effective Time. The directors of Merger Corp as of the
Effective Time shall remain the directors of the Surviving Corporation,
until such time as their successors have been duly elected and have been
qualified.
1.03. Capital Structure. The capital of the Surviving Corporation
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shall be not less than the capital of Merger Corp immediately prior to the
Effective Time.
1.04. Articles of Incorporation and By-Laws. The Articles of
-------------------------------------
Incorporation and By-Laws of Merger Corp in existence at the Effective Time
shall remain the Articles of Incorporation and By-Laws of the Surviving
Corporation following the Effective Time, until such Articles of
Incorporation and By-Laws shall be further amended as provided by applicable
law.
1.05. Assets and Liabilities. At the Effective Time, the title to
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all assets, real estate and other property owned by Community shall vest in
Merger Corp without reversion or impairment. At the Effective Time, all
liabilities of Community shall be assumed by Merger Corp.
1.06. Additional Actions. If at any time after the Effective Time,
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Merger Corp or First Financial shall consider or be advised that any further
deeds, assignments or assurances in law or any other acts are necessary or
desirable (a) to vest, perfect or confirm, of record or otherwise, in the
Surviving Corporation its right, title or interest in, to or under any of
the rights, properties or assets of Community or the Bank, or (b) otherwise
carry out the purposes of this Agreement, Community and the Bank and their
respective officers and directors shall be deemed to have granted to the
Surviving Corporation an irrevocable power of attorney to execute and
deliver all such deeds, assignments or assurances in law and to do all acts
necessary or proper to vest, perfect or confirm title to and possession of
such rights, properties or assets in the Surviving Corporation and otherwise
to carry on the purposes of this Agreement, and the officers and directors
of the Surviving Corporation are authorized in the name of Community or the
Bank or otherwise to take any and all such action.
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SECTION 2
MERGER CONSIDERATION
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2.01. Conversion of Shares. Each share of Community's common stock
--------------------
issued and outstanding immediately prior to the Effective Time, other than
shares held by shareholders who have exercised their dissenter's rights as
set forth in Section 3 ("Dissenting Shares"), shall, by virtue of the Merger
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and without any action on the part of the holder thereof, be converted into
and represent the right to receive the consideration payable as set forth
below to the holder of record thereof, without any interest thereon, upon
surrender of the certificate representing such common stock.
2.02. Consideration. (a) As consideration for the Merger,
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shareholders of Community, other than those shareholders who have exercised
their dissenter's rights as set forth in Section 3, will be entitled to receive
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in cash for each share of Community common stock they own an amount equal to:
(i) the Aggregate Purchase Price (as defined in Section
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2.02(b), and as may be amended or modified by Section
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2.02(c)) minus (A) the aggregate amount to be paid to the
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Community ESOP pursuant to Section 2.02(e), and (B) minus
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the aggregate amount to be paid to the holders of record
as of the Effective Time of the outstanding "in the money"
options of Community (as defined in Section 2.02(f))
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pursuant to Section 2.02(f),
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(ii) divided by 2,147,470 (which is the number of shares
of Community common stock which will be outstanding as of
the Effective Time).
(b) First Financial shall pay an aggregate purchase price (the
"Aggregate Purchase Price") equal to the sum of the following, less an
amount equal to the fees and expenses incurred by Community pursuant to
Section 6.13(b), which amount shall not exceed $25,000 (if the actual amount
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incurred by Community pursuant to Section 6.13(b) exceeds $25,000, the
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amount in excess of $25,000 shall be borne by the Bank), and less any
liabilities of Community (computed on a parent company only basis):
(i) $19,500,000;
(ii) the proceeds realized by Community on an after-tax
basis (in an amount agreed to by First Financial,
Community, and the independent auditors of First
Financial) from the sale of American Bank of Illinois in
Highland, MidAmerica Bank of St. Clair County and The
Egyptian State Bank;
(iii) the amount of cash held by Community on a parent
company only basis (other than amounts included pursuant to
some other section of this Section 2.02(b));
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(iv) the amounts receivable by Community pursuant to
requests for refunds of income taxes paid (in an amount
agreed to by First Financial, Community, and the
independent auditors of First Financial);
(v) an amount equal to the principal balance of the loans
identified on Schedules 2.02(b)(v)(1) and (2) of the
-------------------------------
Disclosure Schedule (as identified in Section 4 hereof)
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which has been placed on the parent company only financial
statements of Community and for which the Bank, as of the
Effective Time, will have a $300,000 reserve allocated
within its general loan loss reserve for the credits set
forth on Schedule 2.02(b)(v)(1) of the Disclosure
----------------------
Schedule; and
(vi) an amount equal to the fair market value of
securities held by Community on a parent company only
basis.
(c) If at the Effective Time the Bank has realized on its
financial records a recovery (in an amount agreed to by First Financial,
Community, and the independent auditors of First Financial) on those loans
identified in Schedule 2.02(c) of the Disclosure Schedule, then the amount
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set forth in Section 2.02(b)(i) shall be increased by the amount of the
------------------
recovery, determined in accordance with this section of the Agreement;
provided, however, that in no event shall such increase in the amount set
forth in Section 2.02(b)(i) exceed $500,000.
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(d) For purposes of Section 2.02(e) and Section 2.02(f), the
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Per Share Merger Consideration shall be determined by dividing:
(i) the sum of (A) the Aggregate Purchase Price, (B)
the amount of proceeds which would be realized by
Community if the "in the money" options to
purchase shares of Community common stock" were
exercised, and (C) the amount of the retired ESOP
debt of $662,605.48, by
(ii) 2,365,869.
The number in Section 2.02(d)(ii) is the sum of 2,147,470 (which is the
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number of shares of Community common stock outstanding), 154,340 (which is
the number of "in the money" Community options to purchase shares of
Community common stock outstanding) and 64,059 (which is the number of
shares of Community common stock held by Community as treasury stock which
would have been outstanding if the Community ESOP had not been terminated).
(e) Of the total Aggregate Purchase Price to be received by
Community, an amount equal to:
(i) (A) 64,059, multiplied by (B) the Per Share Merger
Consideration less $10.3437, plus
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(ii) (A) 64,059, multiplied by (B) the quotient of (1) the
taxes (and any applicable interest or penalties) required
to be paid by Community in accordance with the provisions
of Section 6.12(b), and (2) 2,365,869,
will be placed in the Employee Stock Ownership Plan of Community.
The amount of $10.3437 which is subtracted from the Per Share Merger
Consideration in Section 2.02(e)(i)(B) for this purpose is the quotient of
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the amount of the retired ESOP debt divided by the number of shares of
Community common stock held by Community as treasury stock which would have
been outstanding if the Community ESOP had not been terminated, or
$662,605.48 divided by 64,059.
The number in Section 2.02(e)(ii)(B)(2) is the sum of 2,147,470 (which is
-------------------------
the number of shares of Community common stock outstanding), 154,340 (which
is the number of "in the money" Community options to purchase shares of
Community common stock outstanding) and 64,059 (which is the number of
shares of Community common stock held by Community as treasury stock which
would have been outstanding if the Community ESOP had not been terminated).
(f) Each outstanding "in the money option" of Community shall be
canceled and exchanged for an amount of the total Aggregate Purchase Price
to be received by Community equal to the Per Share Merger Consideration less
the exercise price of such option. For purposes of this Agreement, an
outstanding "in the money" option of Community shall be defined as an option
with an exercise price less than the Per Share Merger Consideration. As of
the date of this Agreement there are, and as of the Effective Time there
will be, 154,340 outstanding "in the money" options of Community.
2.03. Distribution of Cash. (a) Promptly following the Effective
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Time, First Financial shall mail to each Community shareholder a letter of
transmittal providing instructions as to the transmittal to First Financial
of certificates formerly representing shares of Community common stock and
the payment of cash in exchange therefor pursuant to the terms of this
Agreement.
(b) Following the Effective Time, First Financial shall
distribute cash payments, without interest, for shares of Community (other
than Dissenting Shares) to each shareholder of Community at the Effective Time
within twenty (20) business days following receipt by First Financial of the
shareholder's certificate(s) formerly representing such shareholder's shares
of Community common stock together with a properly completed and executed
letter of transmittal, all in form and substance reasonably satisfactory to
the Surviving Corporation and First Financial.
(c) Following the Effective Time, stock certificates formerly
representing Community common stock (other than Dissenting Shares) held by
shareholders of Community shall be deemed to evidence only the right to
receive cash, without interest thereon, pursuant to Section 2.01 and Section
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2.02 hereof.
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(d) At or after the Effective Time, there shall be no transfers
on the stock transfer books of Community of any shares of the common stock of
Community. First Financial shall be entitled to rely upon the stock transfer
books of Community to establish the persons entitled to receive any cash
payment pursuant to this Agreement, which books shall be conclusive with
respect to the ownership of shares of Community common stock.
(e) With respect to any certificate for shares of Community
common stock which has been lost, stolen or destroyed, First Financial shall
be authorized to pay cash pursuant to Section 2.01 and Section 2.02 hereof to
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the registered owner of such certificate upon First Financial's (i) receipt
of an agreement to indemnify First Financial against loss from such lost,
stolen or destroyed certificate, an affidavit of lost, stolen or destroyed
stock certificate and a bond, all in form and substance reasonably
satisfactory to First Financial, and upon compliance by the shareholder of
Community with all other reasonable requirements of First Financial in
connection with such lost, stolen or destroyed stock certificates.
SECTION 3
DISSENTING SHARES
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Shareholders of Community who properly exercise and perfect
statutory dissenters' rights shall have the rights accorded to dissenting
shareholders under Article 11 of the Illinois Business Corporations Act of
1983, as amended.
SECTION 4
REPRESENTATIONS AND WARRANTIES OF COMMUNITY
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Community hereby represents and warrants to First Financial and
Merger Corp with respect to itself and Bank, as its wholly-owned subsidiary,
as follows:
4.01. Organization and Authority. Community is a corporation duly
--------------------------
organized, validly existing and in good standing under the laws of the State
of Illinois. Bank is a national banking association duly organized, validly
existing and in good standing under the laws of the United States of
America. Community and Bank have full power and authority (corporate and
otherwise) to own and lease their properties as presently owned and leased
and to conduct their respective business in the manner and by the means
utilized as of the date hereof. Except as set forth in the Disclosure
Schedule (for purposes of this Agreement, "Disclosure Schedule" shall mean
the schedules referencing the applicable provisions of this Agreement which
are attached hereto and made a part of this Agreement), Community's only
subsidiaries are the Bank and American Bank of Illinois in Highland (located
in Highland and Pocahontas, Illinois), and it has no other subsidiaries and
owns no voting stock or equity securities of any corporation, partnership,
association or other entity, except for stock held by the Bank in the
Federal Home Loan Bank of Chicago and the Federal Reserve Bank of St. Louis.
Bank has no subsidiaries. Bank is subject to primary regulatory supervision
and examination by the Office of the Comptroller of the Currency. Community
has one class of stock registered pursuant to Section 12 of the Securities
Exchange Act of 1934, as amended ("1934 Act"), and is subject to the
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reporting requirements of the 1934 Act. Community has entered into a binding
agreement to sell the stock which it owns of American Bank of Illinois in
Highland.
4.02. Authorization. (a) Community has the requisite corporate
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power and authority to enter into this Agreement and to perform its
obligations hereunder, subject to the fulfillment of the conditions
precedent set forth in Section 8.02(e) and (f) hereof. This Agreement and
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its execution and delivery by Community have been duly authorized and
approved by the Board of Directors of Community and, assuming due execution
and delivery by First Financial, constitutes a valid and binding obligation
of Community, subject to the fulfillment of the conditions precedent set
forth in Section 8.02 hereof, and is enforceable in accordance with its
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terms, except to the extent limited by general principles of equity and
public policy and by bankruptcy, insolvency, fraudulent transfer,
reorganization, liquidation, moratorium, readjustment of debt or other laws
of general application relating to or affecting the enforcement of
creditors' rights.
(b) Neither the execution of this Agreement nor consummation of
the Merger contemplated hereby: (i) conflicts with or violates Community's
Certificate of Incorporation or By-Laws; (ii) conflicts with or violates any
local, state, federal or foreign law, statute, ordinance, rule or regulation
(provided that the approvals of or filings with applicable government
regulatory agencies or authorities required for consummation of the Merger
are obtained) or any court or administrative judgment, order, injunction,
writ or decree; (iii) conflicts with, results in a breach of or constitutes
a default under any note, bond, indenture, mortgage, deed of trust, license,
lease, contract, agreement, arrangement, commitment or other instrument to
which Community or Bank is a party or by which Community or Bank is subject
or bound; (iv) results in the creation of or gives any person, corporation
or entity the right to create any lien, charge, claim, encumbrance or
security interest, or results in the creation of any other rights or claims
of any other party (other than First Financial) or any other adverse
interest, upon any right, property or asset of Community or Bank; or (v)
terminates or gives any person, corporation or entity the right to
terminate, accelerate, amend, modify or refuse to perform under any note,
bond, indenture, mortgage, agreement, contract, lease, license, arrangement,
deed of trust, commitment or other instrument to which Community or Bank is
bound or with respect to which Community or Bank is to perform any duties or
obligations or receive any rights or benefits.
(c) Other than in connection or in compliance with the provisions
of the applicable federal and state banking, securities, and corporation
statutes, all as amended, and the rules and regulations promulgated
thereunder, no notice to, filing with, exemption by or consent,
authorization or approval of any governmental agency or body is necessary
for consummation of the Merger by Community or Bank.
4.03. Capitalization. (a) The authorized capital stock of Community
--------------
as of the date hereof consists, and at the Effective Time will consist, of
1,000,000 shares of preferred stock, $0.01 par value per share, none of
which is issued or outstanding, and 7,000,000 shares of common stock, $0.01
par value per share. As of the date hereof, and at the Effective Time,
2,147,470 shares of the common stock of Community are and will be issued and
outstanding (such issued and outstanding shares are referred to herein as
"Community Common Stock"). Such issued and outstanding shares of Community
Common Stock have been duly and validly authorized by all necessary
corporate action of Community, are validly issued, fully paid and
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nonassessable and have not been issued in violation of any pre-emptive
rights of any present or former Community shareholder. Community has no
common stock authorized, issued or outstanding other than as described in
this Section 4.03(a) and has no intention or obligation to authorize or
---------------
issue any other capital stock or any additional shares of Community Common
Stock. On a consolidated basis as of December 31, 2000, Community had total
capital of approximately $34,890,653, which consisted of common stock of
$26,450, capital surplus of $19,378,177 and undivided profits of
$15,486,026, including unrealized gains or losses on available-for-sale
securities. Each share of Community Common Stock is entitled to one vote per
share. A description of the Community Common Stock is contained in the
Certificate of Incorporation of Community, as amended, as set forth in the
Disclosure Schedule pursuant to Section 4.04 hereof.
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(b) The authorized capital stock of Bank as of the date hereof
consists, and at the Effective Time will consist, of 1,000,000 shares of
common stock, $4.00 par value per share, all of which shares are issued and
outstanding (such issued and outstanding shares are referred to herein as
"Bank Common Stock"). Such issued and outstanding shares of Bank Common
Stock have been duly and validly authorized by all necessary corporate
action of Bank, are validly issued, fully paid and nonassessable, and have
not been issued in violation of any pre-emptive rights of any present or
former Bank shareholder. All of the issued and outstanding shares of common
stock of Bank are owned by Community free and clear of all liens, pledges,
charges, claims, encumbrances, restrictions, security interests, options and
pre-emptive rights and of all other rights or claims of any other person,
corporation or entity with respect thereto. Bank has no capital stock
authorized, issued or outstanding other than as described in this Section
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4.03(b) and has no intention or obligation to authorize or issue any other
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capital stock or any additional shares of Bank Common Stock. On a
consolidated basis as of December 31, 2000, Bank had total capital of
approximately $19,454,534, which consisted of common stock of $4,000,000,
capital surplus of $8,691,900 and undivided profits of $6,762,634, including
unrealized gains or losses on available-for-sale securities. Each share of
Bank Common Stock is entitled to one vote per share. A description of the
Bank Common Stock is contained in the Articles of Incorporation of Bank, as
amended, as set forth in the Disclosure Schedule pursuant to Section 4.04
------------
hereof.
(c) Except as set forth in Schedule 4.03(c) of the Disclosure
----------------
Schedule, there are no options, warrants, commitments, calls, puts,
agreements, understandings, arrangements or subscription rights relating to
any shares of Community Common Stock, or any securities convertible into or
representing the right to purchase or otherwise acquire any common stock or
debt securities of Community, by which Community is or may become bound.
Community does not have any outstanding contractual or other obligation to
repurchase, redeem or otherwise acquire any of the issued and outstanding
shares of Community Common Stock.
(d) There are no options, warrants, commitments, calls, puts,
agreements, understandings, arrangements or subscription rights relating to
any shares of Bank Common Stock, or any securities convertible into or
representing the right to purchase or otherwise acquire any common stock or
debt securities of Bank, by which Bank is or may become bound. Bank does not
have any outstanding contractual or other obligation to repurchase, redeem
or otherwise acquire any of the issued and outstanding shares of Bank Common
Stock.
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(e) Except as set forth in the Disclosure Schedule, Community has
no knowledge of any person or entity which beneficially owns 5% or more of
its outstanding shares of common stock.
4.04. Organizational Documents. The respective Articles of
------------------------
Incorporation and By-Laws of Community, and the Articles of Association and
By-Laws of Bank, representing true, accurate and complete copies of such
corporate documents in effect as of the date of this Agreement, have been
delivered to First Financial and are included in the Disclosure Schedule.
4.05. Compliance with Law. (a) Except as set forth in Schedule 4.05
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of the Disclosure Schedule, none of Community, Bank, nor the fiduciaries of
any Community Plans (as defined in Section 4.14(a)), have engaged in any
activity nor taken or omitted to take any action which has resulted or could
result in the violation of any local, state, federal or foreign law,
statute, regulation, rule, ordinance, order, restriction or requirement, nor
are they in violation of any order, injunction, judgment, writ or decree of
any court or government agency or body. Community and Bank possess and hold
all licenses, franchises, permits, certificates and other authorizations
necessary for the continued conduct of their business without interference
or interruption, and such licenses, franchises, permits, certificates and
authorizations are transferable (to the extent required) to First Financial
or Merger Corp at the Effective Time without any restrictions or limitations
thereon or the need to obtain any consents of government agencies or other
third parties other than as set forth in this Agreement. The Bank has
received no inquiries from any regulatory agency or government authority
relating to its compliance with the Bank Secrecy Act, the Truth-in-Lending
Act or the Community Reinvestment Act or any laws with respect to the
protection of the environment or the rules and regulations promulgated
thereunder.
(b) All agreements, understandings and commitments with, and all
orders and directives of, all government regulatory agencies or authorities
with respect to the financial condition, results of operations, business,
assets or capital of Community or Bank which presently are binding upon or
require action by, or at any time during the last five (5) years have been
binding upon or have required action by, Community or Bank are set forth in
the Disclosure Schedule, and all correspondence, communications and
commitments related thereto have been made available to First Financial.
Except as set forth in Schedule 4.05 of the Disclosure Schedule, there are
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no uncured violations, or violations with respect to which refunds or
restitutions may be required, cited in any examination report of Community
or Bank as a result of an examination by any regulatory agency or body, or
set forth in any accountant's or auditor's report to Community or Bank.
(c) All of the existing offices and branches of Community and Bank
have been legally authorized and established in accordance with all
applicable federal, state and local laws, statutes, regulations, rules,
ordinances, orders, restrictions and requirements. Bank has no approved but
unopened offices or branches.
4.06. Accuracy of Statements Made and Materials Provided to First
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Financial. Except as set forth in Schedule 4.06 of the Disclosure Schedule;
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(a) No representation, warranty or other statement made, or any
information provided, by or on behalf of Community or Bank in this Agreement
or the Disclosure Schedule (and any update thereto), and no written report,
statement, list, certificate, materials or other information furnished or to
be furnished by or on behalf of Community or Bank to First Financial through
and including the Effective Time in connection with this Agreement, the
Merger contemplated hereby, or First Financial's due diligence investigation
or confidential review of Community and the Bank or otherwise (including,
without limitation, any written information which has been or shall be
supplied by Community or Bank with respect to its financial condition,
results of operations, business, assets, capital or directors and officers
for inclusion in the proxy statement relating to the Merger), contains or
shall contain (in the case of information relating to the proxy statement at
the time it is mailed to Community's shareholders) any untrue statement of
material fact or omits or shall omit to state a material fact necessary to
make the statements contained herein or therein, in light of the
circumstances in which they are made, not false or misleading.
(b) No materials or information provided by or on behalf of
Community or Bank to First Financial for use by First Financial or Merger
Corp in any filing with any state or federal regulatory agency or authority
shall (i) contain any untrue or misleading statement of material fact, or
(ii) omit to state a material fact necessary to make the statements
contained therein, in light of the circumstances in which they are made, not
false or misleading.
4.07. Litigation and Pending Proceedings. (a) Except as set forth
----------------------------------
in the Disclosure Schedule, there are no claims, actions, suits,
proceedings, arbitrations or investigations pending or, to the best
knowledge of Community and Bank after due inquiry, threatened in any court
or before any government agency or authority, arbitration panel or otherwise
(nor does Community or Bank have any knowledge of a basis for any claim,
action, suit, proceeding, litigation, arbitration or investigation) against,
by or affecting Community or Bank.
(b) Except as set forth in the Disclosure Schedule, neither
Community nor Bank is: (i) subject to any outstanding judgment, order, writ,
injunction or decree of any court, arbitration panel or governmental agency
or authority; (ii) presently charged with or, to the best knowledge of
Community or Bank after due inquiry, under governmental investigation with
respect to any actual or alleged violations of any law, statute, rule,
regulation or ordinance; or (iii) the subject of any pending or, to the best
knowledge of Community and Bank after due inquiry, threatened proceeding by
any government regulatory agency or authority having jurisdiction over its
respective business, assets, capital, properties or operations.
4.08. Financial Statements and Reports. Community has delivered
--------------------------------
to First Financial copies of the following financial statements and reports of
Community and Bank, including the notes thereto (collectively, the "Community
Financial Statements"):
(a) Consolidated Balance Sheets and the related Consolidated
Statements of Income and Consolidated Statements of Changes in Shareholders'
Equity of Community as of and for the years ended December 31, 2000, 1999
and 1998;
(b) Consolidated Statements of Cash Flows of Community for the
years ended December 31, 2000, 1999, and 1998;
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(c) Consolidated Statements of Changes in Financial Position of
Community for the years ended December 31, 2000 and 1999;
(d) Reports of Condition and Income ("Call Reports") for Bank as
of the close of business on December 31, 2000, 1999, 1998; and
(e) Financial Statements of Community on Form FRY-9LP and Form
FRY-9C filed with the Board of Governors of the Federal Reserve System at
the close of business on December 31, 2000 and 1999.
Except as set forth in Schedule 4.08 of the Disclosure Schedule,
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the Community Financial Statements are true, accurate and complete in all
material respects and present fairly the consolidated financial position of
Community and Bank as of and at the dates shown and the consolidated results
of operations for the periods covered thereby. The Community Financial
Statements described in clauses (a), (b) and (c) above for completed fiscal
years are audited financial statements and have been prepared in conformance
with generally accepted accounting principles applied on a consistent basis,
except as may otherwise be indicated in any accountants' notes or reports
with respect to such financial statements. The Community Financial
Statements do not include any assets, liabilities or obligations or omit to
state any assets, liabilities or obligations, (whether absolute, accrued,
contingent or otherwise), or any other facts which inclusion or omission
would render any of the Community Financial Statements false, misleading or
inaccurate in any material respect.
4.09. Properties, Contracts, Employees and Other Agreements.
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(a) Set forth in the Disclosure Schedule is a true, accurate and complete
copy of the following:
(i) A brief description and the location of all real property
owned by Community or Bank and the principal buildings and
structures located thereon, together with a legal
description of such real property and a title insurance
policy or abstract opinion insuring the same, and each
lease of real property to which Community or Bank is a
party, identifying the parties thereto, the annual rental
payable, the expiration date of the lease and a brief
description of the property covered;
(ii) All conditional sales contracts or other title retention
agreements relating to Community or Bank and agreements
for the purchase of federal funds;
(iii) All agreements, contracts, leases, licenses, lines of
credit, understandings, commitments or obligations of
Community or Bank which individually or in the aggregate:
(A) involve payment or receipt by Community or Bank
(other than as disbursements of loan proceeds to
customers, loan payments by customers or customer
deposits) of more than $10,000;
(B) involve payments based on profits of Community or
Bank;
11
(C) relate to the purchase of goods, products, supplies
or services in excess of $10,000;
(D) were not made in the ordinary course of business; or
(E) may not be terminated without penalty within one
(1) year from the date of this Agreement;
(iv) The name and current annual salary of each director,
officer and employee of Community or Bank whose current
annual salary is in excess of $50,000, and the profit
sharing, bonus or other form of compensation (other than
basic salary) paid or payable by Community or Bank to or
for the benefit of each such person for the year ended
December 31, 2000 and 1999, and any employment, severance
or deferred compensation agreement or arrangement with
respect to each such person; and
(v) A brief description (with reference to any applicable
contractual provisions) of any obligations or liabilities
(whether absolute, accrued, contingent or otherwise) of
Community or Bank related to American Bank of Illinois in
Highland, MidAmerica Bank of St. Clair County, or The
Egyptian State Bank which will continue or arise at or
exist subsequent to consummation of the sale by Community
of the stock which it now owns or owned in the past of
American Bank of Illinois in Highland, MidAmerica Bank of
St. Clair County, or The Egyptian State Bank
(b) Community and Bank have, prior to the date of this Agreement,
provided or given access to First Financial to the files and documentation
of all borrowers of Bank, or persons or entities that are or may become
obligated to Bank under an existing letter of credit, line of credit, loan
transaction, loan agreement, promissory note or other commitment of Bank, in
excess of $10,000 individually or in the aggregate, whether in principal,
interest or otherwise, and including all guarantors of such indebtedness.
(c) Each of the agreements, contracts, commitments, leases,
instruments and documents set forth in the Disclosure Schedule relating to
this Section 4.09 is valid and enforceable in accordance with its terms,
------------
except to the extent limited by general principles of equity and public
policy or by bankruptcy, insolvency, fraudulent transfer, readjustment of
debt or other laws of general application relative to or affecting the
enforcement of creditor's rights. Community and Bank are, and to their
respective best knowledge after due inquiry, all other parties thereto are,
in material compliance with the provisions thereof, and Community and Bank
are not, and to their respective best knowledge after due inquiry, no other
party thereto is, in default in the performance, observance or fulfillment
of any material obligation, covenant or provision contained therein. None of
the foregoing requires the consent of any party to its assignment in
connection with the Merger contemplated by this Agreement. Other than as
disclosed pursuant to this Section 4.09, to the best knowledge of Community
------------
and Bank after due inquiry, no circumstances exist resulting from
transactions effected or to be effected, from events
12
which have occurred or may occur or from any action taken or omitted to be
taken which could reasonably be expected to result in the creation of any
agreement, contract, obligation, commitment, arrangement, lease or document
described in or contemplated by this Section 4.09.
------------
(d) Neither Community nor Bank is, to the best knowledge of
Community and Bank after due inquiry, in default under or in breach of, or
alleged to be in default under or in breach of, any loan or credit
agreement, conditional sales contract or other title retention agreement,
security agreement, bond, indenture, mortgage, license, contract, lease,
commitment or any other instrument, agreement or obligation.
4.10. Absence of Undisclosed Liabilities. Except as provided in
----------------------------------
the Community Financial Statements and in the Disclosure Schedule, except for
unfunded loan commitments and obligations on letters of credit to customers
of Bank, except for trade payables incurred in the ordinary course of
Community's and Bank's business (for purposes of this Section 4, all
---------
references to ordinary course of business shall be deemed to be Community's
and Bank's ordinary course of business), and except for the Merger
contemplated by this Agreement, neither Community nor Bank has, nor will
have at the Effective Time, any obligation, agreement, contract, commitment,
liability, lease or license which exceeds $10,000 individually, or any
obligation, agreement, contract, commitment, liability, lease or license
made outside of the ordinary course of business, nor does there exist any
circumstances resulting from transactions effected or events occurring on or
prior to the date of this Agreement or from any action omitted to be taken
during such period which could reasonably be expected to result in any such
obligation, agreement, contract, commitment, liability, lease or license.
4.11. Title to Assets. Except as described in this Section 4.11:
--------------- ------------
(a) Community and Bank have good and marketable title in fee simple absolute
to all real property (including, without limitation, all real property used
as bank premises and all other real estate owned) which is reflected in the
Community Financial Statements as of December 31, 2000; good and marketable
title to all personal property reflected in the Community Financial
Statements as of December 31, 2000, other than personal property disposed of
in the ordinary course of business since December 31, 2000; good and
marketable title to or right to use by valid and enforceable lease or
contract all other properties and assets (whether real or personal, tangible
or intangible) which Community and Bank purport to own or which Community or
Bank uses in its business; good and marketable title to, or right to use by
terms of a valid and enforceable lease or contract, all other property used
in their respective businesses; and good and marketable title to all
property and assets acquired and not disposed of or leased since December
31, 2000. All of such properties and assets are owned by Community or Bank
free and clear of all land or conditional sales contracts, mortgages, liens,
pledges, restrictions, security interests, charges, claims, rights of third
parties or encumbrances of any nature except: (i) as set forth in the
Disclosure Schedule; (ii) as specifically noted in reasonable detail in the
Community Financial Statements; (iii) statutory liens for taxes not yet
delinquent or being contested in good faith by appropriate proceedings; (iv)
pledges or liens required to be granted in connection with the acceptance of
government deposits or granted in connection with repurchase or reverse
repurchase agreements; and (v) easements, encumbrances and liens of record,
imperfections of title and other limitations which are not material in
amounts to Community on a consolidated basis and which do not materially
detract from the value or materially interfere with the present or
contemplated use of
13
any of the properties subject thereto or otherwise materially impair the use
thereof for the purposes for which they are held or used. All real property
owned or leased by Community or Bank is in compliance with all applicable
zoning and land use laws.
(b) Community, Bank, and all current or former direct or indirect
subsidiaries of Community or Bank have conducted their respective business
in compliance with all federal, state, county and municipal laws, statutes,
regulations, rules, ordinances, orders, directives, restrictions and
requirements relating to, without limitation, responsible property transfer,
underground storage tanks, petroleum products, air pollutants, water
pollutants or storm water or process waste water or otherwise relating to
the environment or toxic or hazardous substances or to the manufacturing,
recycling, handling, processing, distribution, use, generation, treatment,
storage, disposal or transport of any hazardous or toxic substances or
petroleum products (including polychlorinated biphenyls, whether contained
or uncontained, and asbestos-containing materials, whether friable or not),
including, without limitation, the Federal Solid Waste Disposal Act, the
Hazardous and Solid Waste Amendments, the Federal Clean Air Act, the Federal
Clean Water Act, the Occupational Health and Safety Act, the Federal
Resource Conservation and Recovery Act, the Toxic Substances Control Act,
the Federal Comprehensive Environmental Response, Compensation and Liability
Act of 1980 and the Superfund Amendments and Reauthorization Act of 1986,
all as amended, and regulations of the Environmental Protection Agency, the
Nuclear Regulatory Agency, the Army Corp of Engineers, the Department of
Interior, the United States Fish and Wildlife Service and any state
department of natural resources or state environmental protection agency now
or at any time thereafter in effect (collectively, "Environmental Laws").
There are no pending or, to the best knowledge of Community and Bank after
due inquiry, threatened claims, actions or proceedings by any local
municipality, sewage district or other governmental entity against
Community, Bank, or any current or former direct or indirect subsidiaries of
Community or Bank with respect to the Environmental Laws, and there is no
reasonable basis or grounds for any such claim, action or proceeding. No
environmental clearances or other governmental approvals relating to
environmental matters are required for the conduct of the business of
Community or Bank or the consummation of the Merger contemplated hereby.
Neither Community, Bank, nor any current or former direct or indirect
subsidiaries of Community or Bank is the owner, and has not been in the
chain of title or the operator or lessee, of any property on which any
substances have been used, stored, deposited, treated, recycled or disposed
of, which substances if known to be present on, at or under such property
would require clean-up, removal or any other remedial action under any
Environmental Law. Community and Bank owns, operates, leases and controls,
and has owned, operated, leased and controlled, all real property in
compliance with the Environmental Laws. Neither Community, Bank, nor any
current or former direct or indirect subsidiaries of Community or Bank has
any liability for any clean-up or remediation under any of the Environmental
Laws with respect to any real property.
4.12. Loans and Investments. Except as set forth in Schedule 4.12
--------------------- -------------
of the Disclosure Schedule:
(a) There is no loan by Community or Bank in excess of $10,000
that has been classified by bank regulatory examiners or management as "Other
Loans Specially Mentioned," "Substandard," "Doubtful" or "Loss" or in excess
of $10,000 that has been identified by
14
accountants or auditors (internal or external) as having a significant risk
of uncollectability. The most recent loan watch list of Bank and a list of
all loans in excess of $10,000 which Bank has determined to be thirty (30)
days or more past due with respect to principal or interest payments or has
placed on nonaccrual status are set forth in the Disclosure Schedule.
(b) All loans reflected in the Community Financial Statements as
of December 31, 2000 and which have been made, extended, renewed, restructured,
approved, amended or acquired since December 31, 2000: (i) have been made
for good, valuable and adequate consideration in the ordinary course of
business; (ii) constitute the legal, valid and binding obligation of the
obligor and any guarantor named therein, except to the extent limited by
general principles of equity and public policy or by bankruptcy, insolvency,
fraudulent transfer, reorganization, liquidation, moratorium, readjustment
of debt or other laws of general application relative to or affecting the
enforcement of creditors' rights; (iii) are evidenced by notes, instruments
or other evidences of indebtedness which are true, genuine and what they
purport to be; and (iv) are secured, to the extent that Community or Bank
has a security interest in collateral or a mortgage securing such loans, by
perfected security interests or recorded mortgages naming Bank as the
secured party or mortgagee (unless by written agreement to the contrary).
(c) The reserves, the allowance for possible loan and lease
losses and the carrying value for real estate owned which are shown on the
Community Financial Statements are adequate in all material respects under
the requirements of generally accepted accounting principles applied on a
consistent basis to provide for possible losses on items for which reserves
were made, on loans and leases outstanding and real estate owned as of the
respective dates.
(d) None of the investments reflected in the Community Financial
Statements as of and for the period ended December 31, 2000 and none of the
investments made by Community or Bank since December 31, 2000 are subject to
any restriction, whether contractual or statutory, which materially impairs
the ability of Community or Bank to dispose freely of such investment at any
time. Neither Community nor Bank is a party to any repurchase agreements
with respect to securities.
(e) Set forth in the Disclosure Schedule is a true, accurate and
complete list of all loans in which Bank has any participation interest or
which have been made with or through another financial institution on a
recourse basis against Bank.
(f) Except as set forth in the Disclosure Schedule, and except
for customer deposits and ordinary trade payables, neither Community nor Bank
has, nor will they have at the Effective Time, any indebtedness for borrowed
money.
4.13. Shareholder Rights Plan and Anti-takeover Mechanisms. Except
----------------------------------------------------
as otherwise provided in the Disclosure Schedule, Community has no
shareholder rights plan or any other plan, program or agreement involving,
restricting, prohibiting or discouraging a change in control or merger of
Community or which may be considered an anti-takeover mechanism.
4.14. Employee Benefit Plans. Except as set forth in
----------------------
Schedule 4.14(a) - (g) of the Disclosure Schedule:
15
(a) With respect to the employee benefit plans, as defined in
Section 3(3) of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), sponsored or otherwise maintained by Community or Bank,
whether written or oral; in which Community or Bank participates as a
participating employer; to which Community or Bank contributes; with respect
to which Community or Bank acts as administrator, custodian, trustee or
fiduciary; and including any such plans which have been terminated, merged
into another plan, frozen or discontinued; with respect to which Community
or Bank may have any liability (whether absolute, accrued, contingent or
otherwise), (collectively, "Community Plans"): (i) all such Community Plans
have, on a continuous basis since their adoption, been, in all material
respects, maintained in compliance with the requirements prescribed by all
applicable statutes, orders and governmental rules or regulations,
including, without limitation, ERISA, the Internal Revenue Code (the
"Code"), and the Department of Labor ("Department") and Treasury Regulations
promulgated thereunder; (ii) all Community Plans intended to constitute
tax-qualified plans under Section 401(a) of the Code have complied since
their adoption or have been timely amended to comply in all material
respects with all applicable requirements of the Code and the Treasury
Regulations promulgated thereunder, and favorable determination letters have
been timely received from the Internal Revenue Service ("Service") (or the
remedial amendment period has not expired) with respect to each such
Community Plan stating that each, in its current form (or at the time of its
disposition if it has been terminated, merged, frozen or discontinued), is
qualified under and satisfies all applicable provisions of the Code and
Treasury Regulations; (iii) no Community Plan (or its related trust) holds
any stock or other securities of Community or any related or affiliated
person or entity; (iv) neither Community nor Bank has any liability to the
Department or the Service with respect to any Community Plan; (v) Community
has not engaged in any transaction that may subject Community or the Bank,
or any Community Plan, to a civil penalty imposed by Section 502 of ERISA;
(vi) no non-exempt prohibited transaction (as defined in Section 406 of
ERISA or as defined in Section 4975(c) of the Code) has occurred with
respect to any Community Plan; (vii) each Community Plan subject to ERISA or
intended to be qualified under Section 401(a) of the Code has been and, if
applicable, is being operated in all material respects in accordance with
the applicable provisions of ERISA and the Code and the Department and
Treasury Regulations promulgated thereunder; (viii) no participant or
beneficiary or non-participating employee has been denied any benefit due or
to become due under any Community Plan or has been misled as to his or her
rights under any Community Plan; (ix) all obligations required to be
performed by Community or Bank under any provision of any Community Plan
have been performed by them in all material respects and they are not in
default under or in violation of, in any material respect, any provision of
any Community Plan; (x) no event has occurred which would constitute grounds
for an enforcement action by any party under Part 5 of Title I of ERISA
under any Community Plan; (xi) there are no actions, suits, proceedings or
claims pending (other than routine claims for benefits) or, to the best
knowledge of Community and Bank after due inquiry, threatened, against
Community, Bank, any Community Plan or the assets of any Community Plan; and
(xii) with respect to any Community Plan sponsored, participated in or
contributed to by Community or Bank, or with respect to which Community or
Bank is responsible for complying with the reporting and disclosure
requirements of ERISA or the Code, there has been no violation of the
reporting and disclosure requirements imposed either under ERISA or the Code
for which a penalty has been or may be imposed.
16
(b) With regard to any Community Plan intended to be qualified
under Section 401(a) of the Code, no director, officer, employee or agent of
Community or Bank has engaged in any action or failed to act in such a
manner that, as a result of such action or failure to act, the Service could
revoke or deny that plan's qualification under Section 401(a) of the Code,
the exemption under Section 501(a) of the Code for any trust related to such
plan, or the status of such plan as an "employee stock ownership plan"
described in Section 4975(e)(7) of the Code.
(c) Community has provided to First Financial true, accurate and
complete copies and, in the case of any plan or program which has not been
reduced to writing, a summary of all of the following (including all plans
and programs which have been terminated): (i) pension, retirement,
profit-sharing, savings, stock purchase, stock bonus, stock ownership, stock
option and stock appreciation right plans and all amendments thereto and all
summary plan descriptions thereof (including any modifications thereto);
(ii) all employment, deferred compensation (whether funded or unfunded),
salary continuation, consulting, bonus, severance and collective bargaining
agreements, arrangements or understandings; (iii) all executive and other
incentive compensation plans, programs and agreements; (iv) all group
insurance and health insurance contracts, policies or plans; (v) all other
incentive, welfare or employee benefit plans, understandings, arrangements
or agreements, maintained or sponsored, participated in, or contributed to
by Community or Bank for its current or former directors, officers or
employees; and (vi) all reports to any government department or agency filed
within the preceding three years by Community or Bank with respect to any
Community Plan.
(d) No current or former director, officer or employee of
Community or Bank is entitled to or may become entitled to any benefit under
any welfare benefit plans (as defined in Section 3(1) of ERISA) after
termination of employment with Community or Bank, except that such
individuals may be entitled to continue their group health care coverage
pursuant to Section 4980B of the Code if they pay the cost of such coverage
pursuant to the applicable requirements of the Code with respect thereto.
(e) No Community Plan is, and neither Community nor the Bank has
any liability with respect to any plan that is (i) a defined benefit pension
plan subject to Title IV of ERISA, (ii) a pension plan subject to Section
302 of ERISA or Section 412 of the Code, or (iii) a multi-employer pension
plan (as that term is defined in Sections 4001(a)(3) and 3(37) of ERISA).
(f) With respect to any group health plan (as defined in Section
607(1) of ERISA) sponsored or maintained by Community or Bank, in which
Community or Bank participates as a participating employer or to which
Community or Bank contributes, no director, officer, employee or agent of
Community or Bank has engaged in any action or failed to act in such a
manner that, as a result of such action or failure to act, would cause a tax
to be imposed on Community or Bank under Code Section 4980B(a). With respect
to all such plans, all applicable provisions of Section 4980B of the Code
and Section 601 of ERISA have been complied with in all material respects by
Community and Bank.
(g) There are no collective bargaining, employment, management,
consulting, deferred compensation, reimbursement, indemnity, retirement,
early retirement, severance or
17
similar plans or agreements, commitments or understandings, or any employee
benefit or retirement plan or agreement, binding upon Community or Bank and
no such agreement, commitment, understanding or plan is under discussion or
negotiation by management with any employee or group of employees, any member
of management or any other person.
4.15. Obligations to Employees. All obligations and liabilities of
------------------------
and all payments by Community and Bank, and all Community Plans, whether
arising by operation of law, by contract or by past custom, for payments to
trusts or other funds, to any government agency or authority or to any
present or former director, officer, employee or agent (or his or her heirs,
legatees or legal representatives) have been and are being paid to the
extent required by applicable law or by the plan, trust, contract or past
custom or practice, and adequate actuarial accruals and reserves for such
payments have been and are being made by Community and Bank in accordance
with generally accepted accounting principles and applicable law applied on
a consistent basis and actuarial methods with respect to the following: (a)
withholding taxes, unemployment compensation or social security benefits;
(b) all pension, profit-sharing, savings, stock purchase, stock bonus, stock
ownership, stock option and stock appreciation rights plans and agreements;
(c) all employment, deferred compensation (whether funded or unfunded),
salary continuation, consulting, retirement, early retirement, severance,
reimbursement, bonus or collective bargaining plans and agreements; (d) all
executive and other incentive compensation plans, programs, or agreements;
(e) all group insurance and health contracts, policies and plans; and (f)
all other incentive, welfare, retirement or employee benefit plans or
agreements maintained or sponsored, participated in, or contributed to by
Community or Bank for its current or former directors, officers, employees
and agents, including, without limitation, all liabilities and obligations
to the Community Plans (as defined in Section 4.14(a) hereof). All
obligations and liabilities of Community and Bank, whether arising by
operation of law, by contract or by past custom or practice, for all other
forms of compensation which are or may be payable to their current or former
directors, officers, employees or agents or to any Community Plan have been
and are being paid to the extent required by applicable law or by the plan
or contract, and adequate actuarial accruals and reserves for payment
therefor have been and are being made by Community and Bank in accordance
with generally accepted accounting and actuarial principles applied on a
consistent basis. All accruals and reserves referred to in this Section 4.15
are correctly and accurately reflected and accounted for in all material
respects in the Community Financial Statements and the books, statements and
records of Community and Bank.
4.16. Taxes, Returns and Reports. Except as set forth in the
--------------------------
Disclosure Schedule, Community has since January 1, 1995 (a) duly and timely
filed all federal, state, local and foreign tax returns of every type and
kind required to be filed, and each such return is true, accurate and
complete in all material respects; (b) paid or otherwise adequately reserved
in accordance with generally accepted accounting principles for all taxes,
assessments and other governmental charges due or claimed to be due upon it
and Bank or any of their income, properties or assets; and (c) not requested
an extension of time for any such payments (which extension is still in
force). Community has established, and shall establish in the Subsequent
Community Financial Statements, in accordance with generally accepted
accounting principles, a reserve for taxes in the Community Financial
Statements adequate to cover all of Community's and Bank's tax liabilities
(including, without limitation, income taxes, payroll taxes and withholding,
and franchise fees) for the periods then ending. Neither Community nor Bank
has,
18
nor will either of them have, any liability for taxes of any nature for
or with respect to the operation of their respective businesses, including
the business of any subsidiary, or ownership of their assets, including the
assets of any subsidiary, from the date hereof up to and including the
Effective Time, except to the extent set forth in the Subsequent Community
Financial Statements (as hereinafter defined) or as accrued or reserved for
on the books and records of Community. Neither Community nor Bank is
currently under audit by any state or federal taxing authority. No federal,
state or local tax returns of Community have been audited by any taxing
authority during the past five (5) years.
4.17. Deposit Insurance. The deposits of Bank are insured by the
-----------------
FDIC in accordance with the Federal Deposit Insurance Act, as amended, to
the fullest extent provided by applicable law and Community and Bank have
paid or properly reserved or accrued for all current premiums and
assessments with respect to such deposit insurance.
4.18. Insurance. Set forth in the Disclosure Schedule is a list and
---------
brief description of all policies of insurance (including, without
limitation, bankers' blanket bond, directors' and officers' liability
insurance, property and casualty insurance, group health or hospitalization
insurance and insurance providing benefits for employees) owned or held by
Community or Bank on the date hereof or with respect to which Community or
Bank pays any premiums. Each such policy is in full force and effect and all
premiums due thereon have been paid when due, and a true, accurate and
complete copy thereof has been made available to First Financial prior to
the date hereof.
4.19. Books and Records. The books and records of Community and
-----------------
Bank are complete and correct and accurately reflect the basis for the
financial condition, results of operations, business, assets and capital of
Community and Bank set forth in the Community Financial Statements.
4.20. Broker's, Finder's or Other Fees. Except as set forth in the
--------------------------------
Disclosure Schedule and except for reasonable fees of Community's attorneys
and accountants, all of which shall be paid by Community prior to the
Effective Time, no agent, broker or other person acting on behalf of
Community or Bank or under any authority of Community or Bank is or shall be
entitled to any commission, broker's or finder's fee or any other form of
compensation or payment from any of the parties hereto relating to this
Agreement and the Merger contemplated hereby.
4.21. Disclosure Schedule and Documents. All written data,
---------------------------------
documents, materials and information referred to in this Agreement and
delivered by Community or Bank pursuant to or in connection with the
Disclosure Schedule are true, accurate and complete in all material respects
as of the date hereof and with respect to such items delivered subsequent to
the date hereof or with any update to the Disclosure Schedule, will be true,
accurate and complete in all material respects on the date of delivery
thereof.
4.22. Interim Events. Except as set forth in Schedule 4.22 of the
-------------- -------------
Disclosure Schedule and except as otherwise required or permitted hereunder,
since December 31, 2000, neither Community nor Bank has, other than in the
ordinary course of business:
19
(a) Suffered any changes having an adverse impact on the financial
condition, results of operations, business, assets or capital of Community
or Bank in excess of $10,000 individually or in the aggregate;
(b) Suffered any damage, destruction or loss to any of its
properties, not fully paid by insurance proceeds, in excess of $5,000
individually or in the aggregate;
(c) Declared, distributed or paid any dividend or other
distribution to its shareholders;
(d) Repurchased, redeemed or otherwise acquired shares of its
common stock, issued any shares of its common stock or stock appreciation
rights or sold or agreed to issue or sell any shares of its common stock or
any right to purchase or acquire any such stock or any security convertible
into such stock or taken any action to reclassify, recapitalize or split its
stock;
(e) Granted or agreed to grant any increase in benefits payable
or to become payable under any pension, retirement, profit sharing, health,
bonus, insurance or other welfare benefit plan or agreement to employees,
officers or directors of Community or Bank except pursuant to the express
terms thereof;
(f) Increased the salary of any director, officer or employee or
entered into any employment contract, indemnity agreement or understanding
with any officer or employee or installed any employee welfare, pension,
retirement, stock option, stock appreciation, stock dividend, profit sharing
or other similar plan or arrangement;
(g) Leased, sold or otherwise disposed of any of its assets except
as contemplated by Section 2.02(c) or in the ordinary course of business or
---------------
leased, purchased or otherwise acquired from third parties any assets except
in the ordinary course of business;
(h) Except for the Merger contemplated by this Agreement, merged,
consolidated or sold shares of its common stock, agreed to merge or
consolidate with or into any third party, agreed to sell any shares of its
common stock or acquired or agreed to acquire any stock, equity interest,
assets or business of any third party;
(i) Incurred, assumed or guaranteed any obligation or liability
(whether absolute, accrued, contingent or otherwise) other than obligations
and liabilities incurred in the ordinary course of business;
(j) Mortgaged, pledged or subjected to a lien, security interest,
option or other encumbrance any of its assets except for tax and other liens
which arise by operation of law and with respect to which payment is not
past due and except for pledges or liens: (i) required to be granted in
connection with acceptance by Community or Bank of government deposits; or
(ii) granted in connection with repurchase or reverse repurchase agreements;
(k) Except as set forth in the Disclosure Schedule, canceled,
released or compromised any loan, debt, obligation, claim or receivable
other than in the ordinary course of business;
20
(l) Entered into any transaction, contract or commitment other
than in the ordinary course of business;
(m) Agreed to enter into any transaction for the borrowing or
loaning of monies, other than in the ordinary course of its lending business; or
(n) Conducted its business in any manner other than substantially
as it was being conducted through December 31, 2000.
4.23. Regulatory Filings. Community has filed and will continue
------------------
to file in a timely manner all required filings with the Securities and
Exchange Commission ("SEC"), as required by applicable law, including, but
not limited to, all reports on Form 8-K, Form 10-K and Form 10-Q and proxy
statements, and with all federal and state regulatory agencies and authorities
as required by applicable law. All such filings with the SEC and with all
other federal and state regulatory agencies by Community, Bank, and all
current or former direct or indirect subsidiaries of Community or Bank were
and will be true, accurate and complete as of the dates of the filings and
have been complied or will comply in all respects as to form with the
applicable requirements and prepared in conformity with generally accepted
regulatory accounting principles applied on a consistent basis, and no such
filing contained or will contain any untrue statement of a material fact
or omitted to state a material fact necessary in order to make the statements,
at the time and in light of the circumstances under which they were made,
not false or misleading.
4.24. Contracts. Neither Community nor Bank is in default under or
---------
in breach of or, to the best knowledge of Community and Bank after due
inquiry, alleged to be in default under or in breach of, any loan or credit
agreement, conditional sales contract or other title retention agreement,
security agreement, bond, indenture, mortgage, license, contract, lease,
commitment or any other instrument or obligation.
4.25. No Third Party Options. There are no agreements, options,
----------------------
commitments or rights with, of or to any third party to acquire any shares of
capital stock or assets of Community or Bank.
4.26. Indemnification Agreements. Except as set forth in
--------------------------
Schedule 4.26 of the Disclosure Schedule:
-------------
(a) Neither Community nor Bank is a party to any indemnification,
indemnity or reimbursement agreement, contract, commitment or understanding
to indemnify any present or former director, officer, employee, fiduciary of
any Community Plan, shareholder or agent against liability or hold the same
harmless from liability.
(b) No claims have been made against or filed with Community or
Bank nor have, to the best knowledge of Community and Bank after due
inquiry, any claims been threatened against Community or Bank, nor is
Community or Bank aware after due inquiry of any facts or circumstances
which may create the basis for a claim, for indemnification against
liability or for reimbursement of any costs or expenses incurred in
connection with any legal or regulatory
21
proceeding by any present or former director, officer, shareholder, employee
or agent of Community or Bank.
4.27. Shareholder Approval. The affirmative vote of the holders
--------------------
of two-thirds of the Community Common Stock (which are issued and outstanding
on the record date relating to the meeting of shareholders) is required for
shareholder approval of this Agreement and the Merger.
4.28. Trust Administration. The Bank has properly administered all
--------------------
accounts for which it acts as a fiduciary (under ERISA or otherwise) or
agent, custodian, personal representative, guardian, conservator or
investment adviser or investment manager in accordance with the terms of the
governing documents and applicable state and federal law. Neither Community,
the Bank nor any director, officer or employee of Community or the Bank
acting on behalf of the Bank has committed any breach of trust or other
violation of applicable law or regulation with regard to any such fiduciary
or agency account, and the accountings for each such fiduciary or agency
account are true and correct in all material respects and accurately reflect
the assets of such fiduciary or agency account.
4.29. Absence of Changes. Except as set forth in Schedule 4.29 of
------------------ -------------
the Disclosure Schedule, since December 31, 2000 there has not been any
change in the financial condition, the results of operations or the business
of Community or the Bank which would have a material adverse effect on
Community or the Bank.
4.30. Sale of Subsidiary Banks. Except as set forth in Schedule 4.30
------------------------ -------------
of the Disclosure Schedule, upon consummation of the sale by Community of
the stock it holds of American Bank of Illinois in Highland, MidAmerica Bank
of St. Clair County, and The Egyptian State Bank (the "Sold Banks"),
Community shall have no liability or obligation (whether absolute, accrued,
contingent or otherwise) to any individual or entity, with respect to the
sale of the stock of the Sold Banks or with respect in any way to the Sold
Banks. After due inquiry, Community is not aware of any set of facts which
could be expected to give rise to such liabilities or obligations.
4.31. Opinion of Financial Advisor. The Board of Directors of
----------------------------
Community, at a duly constituted and held meeting at which a quorum was
present throughout, has been informed orally by a reputable financial
advisor experienced in transactions such as the Merger that the terms of the
Merger are fair to the shareholders of Community from a financial point of
view.
4.32. Regulatory Matters. Neither Community nor the Bank has taken
------------------
or agreed to take any action or has any knowledge of any fact or
circumstance that would materially impede or delay receipt of any regulatory
approval required for consummation of the transactions contemplated by this
Agreement.
4.33. Representations and Warranties at the Effective Time. All
----------------------------------------------------
representations and warranties of Community and Bank contained herein shall
be true, accurate and complete in all material respects on and as of the
Effective Time as though made or given at such time.
4.34. Nonsurvival of Representations and Warranties. The
---------------------------------------------
representations and warranties of Community and Bank contained in this
Agreement shall expire at the Effective
22
Time, and thereafter Community and Bank, and all directors, officers and
employees of Community and Bank shall have no further liability with respect
thereto, except for fraud or except as otherwise provided by law, whether
statutory, common law or otherwise.
SECTION 5
REPRESENTATIONS AND WARRANTIES OF FIRST FINANCIAL
-------------------------------------------------
First Financial represents and warrants to Community as follows:
5.01. Organization and Authority. First Financial is a corporation
--------------------------
duly organized and validly existing under the laws of the State of Indiana
and has full power and authority (corporate and otherwise) to own and lease
its properties as presently owned and leased and to conduct its business in
the manner and by the means utilized as of the date hereof.
5.02. Authorization. First Financial has the requisite corporate
-------------
power and authority to enter into this Agreement and to carry out its
obligations hereunder, subject to the fulfillment of the conditions
precedent set forth in Section 8.01 hereof. This Agreement and its execution
------------
and delivery by First Financial have been duly authorized by the Board of
Directors of First Financial. This Agreement constitutes a valid and binding
obligation of First Financial, subject to the conditions precedent set forth
in Section 8.01 hereof, and is enforceable in accordance with its terms,
------------
except to the extent limited by general principles of equity and public
policy and by bankruptcy, insolvency, reorganization, liquidation,
moratorium, readjustment of debt or other laws of general application
relating to or affecting the enforcement of creditors' rights.
(b) Neither the execution of this Agreement nor consummation of
the Merger contemplated hereby: (i) conflicts with or violates First Financial's
Articles of Incorporation or By-Laws; (ii) conflicts with or violates in any
material respect any local, state, federal or foreign law, statute,
ordinance, rule or regulation (provided that the approvals of or filings
with applicable government regulatory agencies or authorities required for
consummation of the Merger are obtained) or any court or administrative
judgment, order, injunction, writ or decree; or (iii) conflicts with,
results in a breach of or constitutes a material default under any note,
bond, indenture, mortgage, deed of trust, license, contract, lease,
agreement, arrangement, commitment or other instrument to which First
Financial is subject or bound and which is material to First Financial on a
consolidated basis.
(c) Other than in connection or in compliance with applicable
federal and state banking, securities and corporation statutes, all as
amended, and the rules and regulations promulgated thereunder, no notice to,
filing with, exemption by or consent, authorization or approval of any
governmental agency or body is necessary for the consummation by First
Financial of the Merger contemplated by this Agreement.
5.03. Litigation and Pending Proceedings. There are no claims,
----------------------------------
actions, suits, proceedings, investigations or arbitrations pending or, to
the best knowledge of First Financial after due inquiry by the officers of
First Financial, threatened in any court or before any government agency or
authority, arbitration panel or otherwise (nor does First Financial have any
23
knowledge of a basis for any claim, action, suit, proceeding, litigation,
investigation or arbitration) against, by or affecting First Financial which
would reasonably be expected to prevent the performance of this Agreement,
declare the same unlawful or cause the rescission hereof.
5.04. Accuracy of Statements Made to Community. No representation,
----------------------------------------
warranty or other statement made, or any information provided, by First
Financial in this Agreement, and no written report, statement, list,
certificate, materials or other information furnished or to be furnished by
First Financial to Community through and including the Effective Time in
connection with this Agreement or the Merger contemplated hereby, contains
or shall contain (in the case of information relating to the proxy statement
at the time it is mailed to Community's shareholders) any untrue or
misleading statement of material fact or omits or shall omit to state a
material fact necessary to make the statements contained herein or therein,
in light of the circumstances in which they are made, not false or
misleading.
5.05. Representations and Warranties at the Effective Date. All
----------------------------------------------------
representations and warranties of First Financial contained herein shall be
true, accurate and complete in all material respects on and as of the
Effective Time as though made or given at such time.
5.06. Nonsurvival of Representations and Warranties. The
---------------------------------------------
representations and warranties of First Financial contained in this
Agreement shall expire at the Effective Time and, thereafter, neither First
Financial nor its directors, officers and employees shall have any further
liability with respect thereto, except for fraud or except as otherwise
provided by law, whether statutory, common law or otherwise.
5.07. Shareholder Approval. Approval by First Financial's
--------------------
shareholders of the Merger or any other actions contemplated by this Agreement
is not required.
SECTION 6
COVENANTS OF COMMUNITY
----------------------
Community covenants and agrees with First Financial and Merger Corp
as follows:
6.01. Shareholder Approval. Community will submit this Agreement to
--------------------
its shareholders for approval at a meeting to be called and held in
accordance with applicable law and the Articles of Incorporation of
Community at the earliest practicable date. The Board of Directors of
Community will recommend to Community's shareholders that such shareholders
approve this Agreement and the Merger contemplated hereby and will solicit
proxies voting in favor of this Agreement from Community's shareholders.
6.02. Other Approvals. (a) Community will proceed expeditiously,
---------------
cooperate fully and use its best efforts to assist First Financial in
procuring upon reasonable terms and conditions all consents, authorizations,
approvals, registrations and certificates, in completing all filings and
applications and in satisfying all other requirements prescribed by law
which are necessary for consummation of the Merger on the terms and
conditions provided in this Agreement at the earliest possible reasonable
date.
24
(b) Community will use commercially reasonable efforts to obtain
any required third party consents to agreements, contracts, commitments,
leases, instruments and documents described in the Disclosure Schedule
pursuant to Section 4.
---------
(c) Community will cooperate with First Financial in and shall
take all necessary action to effectuate the disposition of the Community Plans,
as provided in Section 6.13 hereof. Community shall pay all costs and
------------
expenses associated with such dispositions.
6.03. Conduct of Business. (a) Except as set forth in the
-------------------
Disclosure Schedule, on and after the date of this Agreement and until the
Effective Time or until this Agreement will be terminated as herein
provided, Community will not, without the prior written consent of First
Financial:
(i) make any changes in its capital stock accounts
(including, without limitation, any stock split,
stock dividend, recapitalization or
reclassification);
(ii) authorize a class of stock or issue, or authorize
the issuance of, securities other than or in
addition to the issued and outstanding common
stock as set forth in Section 4.03 hereof;
------------
(iii) distribute or pay any dividends on its shares of
common stock, or authorize a stock split, or make
any other distribution to its shareholders;
(iv) redeem any of its outstanding shares of common stock;
(v) merge, combine or consolidate or effect a share
exchange with or sell its assets or any of its
securities to any other person, corporation or
entity or enter into any other similar
transaction not in the ordinary course of
business;
(vi) purchase any assets or securities or assume any
liabilities of another bank holding company,
bank, corporation or other entity, except in the
ordinary course of business necessary to manage
its investment portfolio;
(vii) make any loan or commitment to lend money, issue
any letter of credit or accept any deposit,
except in the ordinary course of business in
accordance with its existing banking practices;
(viii) except for the disposition in the ordinary course
of business of other real estate owned and except
for the sale by Community of the stock it holds
of American Bank of Illinois in Highland,
MidAmerica Bank of St. Clair County, and The
Egyptian State Bank, acquire or dispose of any
real or personal property or fixed asset
constituting a capital investment in excess of
$10,000 individually or $25,000 in the aggregate;
25
(ix) subject any of its properties or assets to a
mortgage, lien, claim, charge, option,
restriction, security interest or encumbrance,
except for tax and other liens which arise by
operation of law and with respect to which
payment is not past due and except for pledges or
liens: (i) required to be granted in connection
with acceptance by Community of government
deposits; or (ii) granted in connection with
repurchase or reverse repurchase agreements;
(x) promote to a new position or increase the rate of
compensation or enter into any agreement to
promote to a new position or increase the rate of
compensation, of any director, officer or
employee of Community or Bank;
(xi) execute, create, institute, modify, amend, terminate
(except with respect to any amendments to the
Community Plans required by law, rule or regulation)
or engage in any transaction with any pension,
retirement, savings, stock purchase, stock bonus,
stock ownership, stock option, stock appreciation or
depreciation right or profit sharing plans; any
employment, deferred compensation, consulting, bonus
or collective bargaining agreement; any group
insurance or health contract or policy; or any other
incentive, retirement, welfare or employee welfare
benefit plan, agreement or understanding for current
or former directors, officers or employees of
Community or Bank; or change the level of benefits or
payments under any of the foregoing or increase or
decrease any severance or termination of pay benefits
or any other fringe or employee benefits other than
as required by law or regulatory authorities or the
terms of any of the foregoing;
(xii) modify, amend or institute new employment
policies or practices, or enter into, renew or
extend any employment, indemnity, reimbursement,
consulting, compensation or severance agreements
with respect to any present or former directors,
officers or employees of Community or Bank;
(xiii) hire or employ any new or additional employees of
Community or Bank, except those which are
reasonably necessary for the proper operation of
its business;
(xiv) elect or appoint any officers or directors of
Community or Bank who are not presently serving in
such capacities;
(xv) amend, modify or restate Community's or Bank's
Articles of Incorporation or By-Laws from those
in effect on the date of this Agreement and as
delivered to First Financial hereunder;
26
(xvi) give, dispose of, sell, convey or transfer;
assign, hypothecate, pledge or encumber; or grant
a security interest in or option to or right to
acquire any shares of common stock or
substantially all of the assets of Community or
Bank, or enter into any agreement or commitment
relative to the foregoing;
(xvii) fail to continue to make additions to in
accordance with past practices and to otherwise
maintain in all respects Community's or Bank's
reserve for loan and lease losses, or any other
reserve account, in accordance with safe, sound,
and prudent banking practices and in accordance
with generally accepted accounting principles
applied on a consistent basis;
(xviii) fail to accrue, pay, discharge and satisfy all
debts, liabilities, obligations and expenses,
including, but not limited to, trade payables,
incurred in the regular and ordinary course of
business as such debts, liabilities, obligations
and expenses become due;
(xix) issue, or authorize the issuance of, any securities
convertible into or exchangeable for any shares of
the capital stock of Community or Bank;
(xx) except for obligations disclosed within this
Agreement, FHLB daily advances utilized for the
purpose of Community's and the Bank's cash
management, or in Schedule 6.03(a)(xx) of the
--------------------
Disclosure Statement, trade payables and similar
liabilities and obligations incurred in the ordinary
course of business and the payment, discharge or
satisfaction in the ordinary course of business of
liabilities reflected in the Community Financial
Statements or the Subsequent Community Financial
Statements, borrow any money or incur any
indebtedness including, without limitation, through
the issuance of debentures, or incur any liability
or obligation (whether absolute, accrued, contingent
or otherwise), in an aggregate amount exceeding
$10,000;
(xxi) open, close, move or, in any material respect,
expand, diminish, renovate, alter or change any of
its offices or branches;
(xxii) pay or commit to pay any management or consulting
or other similar type of fees; or
(xxiii) enter into any contract, agreement, lease,
commitment, understanding, arrangement or
transaction or incur any liability or obligation
(other than as contemplated by Section 6.03(a)(vii)
--------------------
hereof and legal, accounting and fees related to
the Merger) requiring payments by Community which
exceed $10,000, whether individually or in the
aggregate, or that is not a trade payable or incurred
in the ordinary course of business.
27
(b) Community will maintain, or cause to be maintained, in full
force and effect, insurance on its and the Bank's assets, properties and
operations, fidelity coverage and directors' and officers' liability
insurance in such amounts and with regard to such liabilities and hazards as
are currently insured by Community and/or the Bank as of the date of this
Agreement.
6.04. Preservation of Business. On and after the date of this
------------------------
Agreement and until the Effective Time or until this Agreement is terminated
as herein provided, Community will: (a) carry on its business diligently,
substantially in the manner as is presently being conducted and in the
ordinary course of business; (b) use commercially reasonable efforts to
preserve its business organization intact (except for the sale by Community
of the stock it holds of American Bank of Illinois in Highland, MidAmerica
Bank of St. Clair County, and The Egyptian State Bank), keep available the
services of the present officers and employees and preserve its present
relationships with customers and persons having business dealings with it;
(c) maintain all of the properties and assets that it owns or utilizes in
the operation of its business as currently conducted in good operating
condition and repair, reasonable wear and tear excepted, and maintain
insurance upon such properties and assets in amounts and kinds comparable to
that in effect on the date of this Agreement; (d) maintain its books,
records and accounts in the usual, regular and ordinary manner, on a basis
consistent with prior years and in compliance with all material respects
with all statutes, laws, rules and regulations applicable to them and to the
conduct of its business; and (e) not knowingly do or fail to do anything
which will cause a breach of, or default in, any contract, agreement,
commitment, obligation, understanding, arrangement, lease or license to
which it is a party or by which it is or may be subject or bound which would
reasonably be expected to have a material adverse effect on the financial
condition, results of operations, business, assets, or capital of Community.
6.05. Press Releases. Except as required by law, Community will not
--------------
issue any press or news releases or make any other public announcements or
disclosures relating to the Merger without the prior consent of First
Financial following delivery to First Financial of a final copy of such
press or news release, which consent shall not be unreasonably withheld.
6.06. Disclosure Schedule Update. Community will promptly
--------------------------
supplement, amend and update, upon the occurrence of any change prior to the
Effective Time, and as of the Effective Time, the Disclosure Schedule with
respect to any matters or events hereafter arising which, if in existence or
having occurred as of the date of this Agreement, would have been required
to be set forth or described in the Disclosure Schedule or this Agreement
and including, without limitation, any fact which, if existing or known as
of the date hereof, would have made any of the representations or warranties
of Community or Bank contained herein materially incorrect, untrue or
misleading.
6.07. Information, Access Thereto, Confidentiality. First Financial
--------------------------------------------
and its representatives and agents will, at all times during normal business
hours prior to the Effective Time, have full and continuing access to the
properties, facilities, operations, books and records of Community. First
Financial and its representatives and agents may, prior to the Effective
Time, make or cause to be made such reasonable investigation of the
operations, books, records and properties of Community and Bank and of their
respective financial and legal condition as deemed necessary or advisable to
familiarize themselves with such operations, books, records,
28
properties and other matters; provided, however, that such access or
investigation shall not interfere unnecessarily with the normal business
operations of Community. Upon request, Community will furnish First Financial
or its representatives or agents, their attorneys' responses to external
auditors requests for information, management letters received from their
external auditors and such financial, loan and operating data and other
information reasonably requested by First Financial which has been or is
developed by Community, its auditors, accountants or attorneys (provided with
respect to attorneys, such disclosure would not result in the waiver by
Community of any claim of attorney-client privilege), and will permit First
Financial or its representatives or agents to discuss such information directly
with any individual or firm performing auditing or accounting functions for
Community, and such auditors and accountants will be directed to furnish
copies of any reports or financial information as developed to First
Financial or its representatives or agents. No investigation by First
Financial will affect the representations and warranties made by Community
or Bank herein. Any confidential information or trade secrets received by
First Financial or its representatives or agents in the course of such
examination will be treated confidentially, and any correspondence,
memoranda, records, copies, documents and electronic or other media of any
kind containing such confidential information or trade secrets or both shall
be destroyed by First Financial or, at Community's request, returned to
Community in the event this Agreement is terminated as provided in Section 9
---------
hereof. This Section 6.07 will not require the disclosure of any information
------------
to First Financial which would be prohibited by law.
6.08. Subsequent Community Financial Statements. As soon as
-----------------------------------------
reasonably available after the date of this Agreement, Community will
deliver to First Financial the monthly unaudited consolidated balance sheets
and profit and loss statements of Community prepared for its internal use,
Bank's Call Reports for each quarterly period completed prior to the
Effective Time, and all other financial reports or statements submitted by
Community or Bank to regulatory authorities after the date hereof, to the
extent permitted by law (collectively, "Subsequent Community Financial
Statements"). The Subsequent Community Financial Statements will be prepared
on a basis consistent with past accounting practices and generally accepted
accounting principles applied on a consistent basis to the extent applicable
and shall present fairly the financial condition and results of operations
as of the dates and for the periods presented. The Subsequent Community
Financial Statements, including the notes thereto, will not include any
assets, liabilities or obligations or omit to state any assets, liabilities
or obligations (whether absolute, accrued, contingent or otherwise) or any
other facts, which inclusion or omission would render such financial
statements inaccurate, incomplete or misleading in any material respect.
6.09. Employee Benefits. Neither the terms of this Agreement nor the
-----------------
provision of any employee benefits by First Financial to employees of
Community or the Bank will: (a) create any employment contract, agreement or
understanding with or employment rights for, or constitute a commitment or
obligation of employment to, any of the officers or employees of Community
or the Bank; or (b) prohibit or restrict First Financial or its
subsidiaries, whether before or after the Effective Time, from changing,
amending or terminating any employee benefit plans or programs provided to
its employees from time to time.
29
6.10. Environmental Reports. If requested by First Financial,
---------------------
Community and Bank will cooperate with an environmental consulting firm
designated by First Financial in connection with the conduct by such firm of
a phase one environmental investigation on all real property owned or leased
by Community as of the date of this Agreement, and any real property
acquired or leased by Community after the date of this Agreement.
6.11. Other Negotiations. On and after the date of this Agreement
------------------
and until the Effective Time or until this Agreement is terminated as herein
provided, except with the prior written approval of First Financial, neither
Community nor Bank shall, and neither Community nor Bank shall permit or
authorize its directors, officers, employees, agents or representatives to,
directly or indirectly, initiate, solicit, encourage or engage in
discussions or negotiations with, or provide information to, any
corporation, association, partnership, person or other entity or group
concerning any merger, consolidation, share exchange, combination, purchase
or sale of substantial assets, sale of shares of common stock (or securities
convertible or exchangeable into or otherwise evidencing, or any agreement
or instrument evidencing the right to acquire, capital stock) or similar
transaction relating to Community or Bank or to which Community or Bank may
become a party (all such transactions are hereinafter referred to as
"Acquisition Transactions"). Community or Bank shall promptly communicate to
First Financial the terms of any proposal or offer which either of them may
receive with respect to an Acquisition Transaction and any request by or
indication of interest on the part of any third party with respect to the
initiation of any Acquisition Transaction or discussions with respect
thereto.
6.12. Payment of Certain Expenses and Taxes. On or prior to the
-------------------------------------
Effective Time, Community shall pay all legal, accounting, and investment
banking fees of Community relating to the Merger and the transfer, in
December 2000, of Community stock by the Community Employee Stock Ownership
Plan ("ESOP") to Community. Prior to the Effective Time, Community shall
also take the following actions:
(a) Special Payment to Community ESOP. Pay to the Special
---------------------------------
Trustee of the Community ESOP an amount equal to the
amount to be placed in the ESOP pursuant to Section
-------
2.02(e) of this Agreement.
-------
(b) Payment of Taxes. File with the Internal Revenue Service
----------------
Form 5330, Return of Excise Taxes Related to Employee
Benefit Plans, for 2000 and 2001 and cause to be paid all
taxes (and, to the extent applicable, any interest and
penalties associated with such taxes) on the basis that
the amount produced by the calculation required in Section
6.12(a) is subject to the tax imposed by Section 4975(a)
of the Code for calendar years 2000 and 2001.
6.13. Disposition of Community Tax-Qualified Plans. Community shall
--------------------------------------------
take all necessary corporate action to effectuate the disposition of the tax-
qualified plans sponsored by them (collectively, "Community Tax-Qualified
Plans") as provided in this Section 6.13 and Section 7.03 hereof. Such action
------------ ------------
shall be taken at the expense of Community, in a manner which satisfies all
requirements of applicable law, and is satisfactory to counsel for FFC.
30
(a) Participation in Merger Transaction and Merger of Community
-----------------------------------------------------------
401(k) Plan.
------------
(i) In connection with the Merger, Community shall
appoint an independent fiduciary, acceptable to
First Financial and its counsel, which may be the
same entity as the Special Trustee provided for
in subsection 6.13(b), and shall be also take all
actions necessary to cause the fiduciaries of the
Community 401(k) Plan to take all of the
following actions:
(A) Implement a written confidential pass
through voting procedure pursuant to
which the participants under the
Community 401(k) Plan and their
beneficiaries may direct the appointed
independent fiduciary regarding the
manner in which the shares of Community
common stock allocated to their
Community 401(k) accounts are to be
voted with respect to the Merger; and
(B) Provide the Community 401(k) Plan
participants and their beneficiaries
with a written notice regarding the
existence of and provisions for such
confidential pass through voting
procedures, as well as the same written
materials to be provided to the
shareholders of Community in connection
with the Merger.
(ii) As soon as administratively feasible after the
Effective Time ("Disposition Date"), the Community
Financial Corp. 401(k) Plan ("Community 401(k) Plan")
shall be merged with and into the First Financial
Corporation Employees' 401(k) Savings Plan ("FFC
401(k) Plan"); provided, however, that such merger
shall be subject to receipt of a determination letter
from the Internal Revenue Service ("Service") to
the effect that the merger of the Community 401(k)
Plan into the FFC 401(k) Plan will not adversely
affect the tax-qualified status of either plan.
First Financial shall be responsible for obtaining
such determination letter. All account balances
maintained under the Community 401(k) Plan shall
become fully vested on the day on which the Effective
Time occurs. From the date of this Agreement through
the Disposition Date, Community may continue to make
contributions to the Community 401(k) Plan so long as
such contributions are comparable in amount to any
past contributions to such plan.
(b) Participation in Merger Transaction and Termination of
------------------------------------------------------
Community ESOP. In connection with the Merger, Community shall appoint an
--------------
independent, institutional "Special Trustee" experienced in acting as an
independent employee stock ownership plan trustee and which is acceptable to
First Financial and its counsel, to act as an independent fiduciary solely
on behalf of the Community ESOP and the participants and beneficiaries
thereunder and shall also take all actions necessary to cause the
fiduciaries of the Community ESOP, including the "Special Trustee"
thereunder, to take all of the following actions:
(i) Implement a written confidential pass through
voting procedure pursuant to which the
participants under the Community ESOP and their
31
beneficiaries may direct the Special Trustee
regarding the manner in which the shares of
Community common stock allocated to their
Community ESOP accounts are to be voted with
respect to the Merger;
(ii) Provide the Community ESOP participants and their
beneficiaries with a written notice regarding the
existence of and provisions for such confidential
pass through voting procedures, as well as the
same written materials to be provided to the
shareholders of Community in connection with the
Merger;
(iii) Obtain a written opinion from an independent
financial advisor, which is experienced in acting as
a financial advisor to independent employee stock
ownership plan trustees and which is acceptable to
First Financial and its counsel, to the Special
Trustee of the Community ESOP to the effect that the
consideration to be received by the Community ESOP
in the Merger in exchange for the shares of Community
common stock, will (i) constitute no less than
"adequate consideration" as defined in Section 3(18)
of ERISA, and (ii) that the terms and conditions of
the Merger, as they apply to the Community ESOP,
including the disposition of shares of Community
common stock prior to the Merger (taking into account
the actions required to be taken in connection
therewith by Section 6.12) and the disposition of the
------------
Community ESOP in connection therewith, are fair to
the Community ESOP and its participants from a
financial point of view. The contents of the written
opinion referred to in the preceding sentence must
be acceptable in form and content to First Financial
and its counsel;
(iv) Take any and all additional actions necessary to
satisfy the requirements of ERISA applicable to the
Community ESOP fiduciaries in connection with the
Merger;
(v) Prior to the distribution of any ESOP accounts in
connection with the termination of the Community
ESOP, Community shall have obtained a
determination letter from the Service to the
effect that the termination will not affect the
tax-qualified status of the Community ESOP.
(c) First Financial and its counsel shall either draft or review
and shall be supplied with copies of all documents, filings, resolutions,
amendments or other writings prepared by or on behalf of Community in
connection with carrying out any of the provisions of this Section 6.13.
------------
6.14. SEC and Other Reports. Promptly upon its becoming available,
---------------------
furnish to First Financial one (1) copy of each financial statement, report,
notice, or proxy statement sent by Community to its shareholders generally
and of each regular or periodic report, registration statement or prospectus
filed by Community with Nasdaq or the SEC or any successor agency, and of
any order issued by any Governmental Authority in any proceeding to which
Community
32
is a party. For purposes of this provision, "Governmental Authority" shall mean
any government (or any political subdivision or jurisdiction thereof), court,
bureau, agency or other governmental entity having or asserting jurisdiction
over Community or any of its business, operations or properties.
6.15. Adverse Actions. Community shall not knowingly take any action
---------------
that is intended or is reasonably likely to result in (i) any of its
representations and warranties set forth in this Agreement being or becoming
untrue in any respect at any time at or prior to the Effective Time, (ii)
any of the conditions to the Merger set forth in Section 8 not being
---------
satisfied, (iii) a material violation of any provision of this Agreement or
(iv) a delay in the consummation of the Merger except, in each case, as may
be required by applicable law or regulation.
6.16. Termination Expenses. At or prior to the Effective Time the
--------------------
Bank shall accrue for and pay all salary termination expenses associated with
the termination of the Bank's and Community's employment agreements.
6.17. Addition to Loan Loss Reserve. Prior to the Effective Time
-----------------------------
the Bank shall make an additional provision to its allowance for loan loss
reserve in an amount as shall be requested by First Financial.
SECTION 7
COVENANTS OF FIRST FINANCIAL
----------------------------
First Financial covenants and agrees with Community as follows:
7.01. Approvals. (a) First Financial shall have primary
---------
responsibility for the preparation, filing and costs of all bank holding
company and bank regulatory applications required for consummation of the
Merger. First Financial shall provide to Community's counsel copies of all
applications filed and copies of all material written communications with
all state and federal bank regulatory agencies relating to such
applications. First Financial shall proceed expeditiously, cooperate fully
and use its best efforts to procure, upon terms and conditions reasonably
acceptable to First Financial, all consents, authorizations, approvals,
registrations and certificates, to complete all filings and applications and
to satisfy all other requirements prescribed by law which are necessary for
consummation of the Merger on the terms and conditions provided in this
Agreement at the earliest possible reasonable date.
7.02. Press Releases. Except as required by law, First Financial
--------------
shall not issue any press releases or make any other public announcements or
disclosures relating primarily to Community with respect to the Merger
without the prior consent of Community, which consent shall not be
unreasonably withheld.
7.03. Employee Benefit Plans. (a) At such time as First Financial
----------------------
shall determine, in its sole discretion, but in no event later than December
31, 2001, First Financial will make available to the employees of Community
who continue as employees of any subsidiary of First Financial after the
Effective Time and, further, subject to Subsections 7.03(b), (c) and (d)
--------------------------------
hereof,
33
substantially the same employee benefits on substantially the same
terms and conditions that First Financial may offer to similarly situated
officers and employees of its banking subsidiaries from time to time. Until
such time as the employees of Community become covered by the First
Financial welfare benefit plans, the employees of Community shall remain
covered by their respective welfare benefit plans, subject to the terms of
such plans.
(b) Subject to the provisions of subsection (c) hereof, years of
service (as defined in the applicable First Financial plan) of an officer or
employee of Community prior to the Effective Time shall be credited,
effective as of the date on which such employees become covered by a
particular First Financial plan, to each such officer or employee eligible
for coverage under Section 7.03(a) hereof for purposes of: (i) eligibility
---------------
under First Financial's employee welfare benefit plans; and (ii) eligibility
and vesting, but not for purposes of benefit accrual or contributions, under
the First Financial Corporation Employees' Pension Plan ("FFC Pension Plan")
under the First Financial Corporation Employee Stock Ownership Plan ("FFC
ESOP") or under the FFC 401(k) Plan. Subject to the provisions of Section 6.13
------------
hereof, those officers and employees of Community who otherwise meet
the eligibility requirements of the FFC Pension Plan or FFC ESOP, based upon
their age and years of Community service, shall become participants
thereunder on the first plan entry date under the FFC Pension Plan or FFC
ESOP, as the case may be, which coincides with or next follows the Effective
Time. Those officers or employees who do not meet the eligibility
requirements of the FFC Pension Plan, First Financial Corporation 401(k)
Plan or FFC ESOP on such date shall become participants thereunder on the
first plan entry date under the FFC Pension Plan or FFC ESOP, as the case
may be, which coincides with or next follows the date on which such
eligibility requirements are satisfied. Subject to the provisions of Section
6.13 hereof, those officers and employees of Community who otherwise meet
the eligibility requirements of the FFC 401(k) Plan, based upon their age
and years of Community service shall become participants thereunder on the
day immediately following the Disposition Date of such plan. Those officers
or employees who do not meet the eligibility requirements of the FFC 401(k)
Plan on such date shall become participants thereunder on the first plan
entry date under the FFC 401(k) Plan which coincides with or next follows
the date on which such eligibility requirements are satisfied.
(c) No employee of Community serving as of the Effective Time
shall be subject to any pre-existing condition limitation under any of First
Financial's welfare benefit plans if such officer, employee or individual
was not subject to any pre-existing condition limitation under the
corresponding Community welfare benefit plan on the day immediately
preceding the day he becomes a participant in the First Financial welfare
benefit plans pursuant to Section 7.03(a) hereof. If in the sole discretion
---------------
of First Financial it is administratively feasible without unreasonable
efforts or expense, expenses incurred by a Community employee or a Community
employee's covered dependent or spouse under a Community welfare benefit
plan shall be taken into account for purposes of satisfying any applicable
deductible, coinsurance or maximum out-of-pocket provisions under the
corresponding First Financial welfare benefit plan in the year in which such
individuals become participants in the First Financial plan.
(d) Neither the terms of this Agreement nor the provision of any
employee benefits by First Financial or any of its subsidiaries to employees
of Community or Bank shall: (i) create
34
any employment contract, agreement or understanding with or employment rights
for, or constitute a commitment or obligation of employment to, any of the
officers or employees of Community or Bank; or (ii) prohibit or restrict First
Financial or its subsidiaries, whether before or after the Effective Time, from
changing, amending or terminating any employee benefits provided to its
employees from time to time.
(e) First Financial shall take any and all actions necessary
to effectuate the disposition of the Community Plans provided by this
Section 7.03 and by Section 6.13 hereof.
------------ ------------
7.04. Adverse Actions. First Financial shall not knowingly take any
---------------
action that is intended or is reasonably likely to result in (i) any of its
representations and warranties set forth in this Agreement being or becoming
untrue in any respect at any time at or prior to the Effective Time, (ii)
any of the conditions to the Merger set forth in Section 8 not being
---------
satisfied, (iii) a material violation of any provision of this Agreement or
(iv) a delay in the consummation of the Merger except, in each case, as may
be required by applicable law or regulation.
7.05. Directors' and Officers' Liability Insurance. First Financial
--------------------------------------------
agrees that either Community or the Bank (as determined by Community), prior
to the Effective Time, may pay the premium necessary to extend for three
years from the Effective Time, Community's current directors' and officers'
liability insurance policy with respect to matters occurring prior to the
Effective Time; provided, however, that the amount of such premium shall not
exceed an amount in the aggregate greater than three times the cost of the
most recent policy of one year.
7.06. Assumption of Supplemental Executive Retirement Agreements.
----------------------------------------------------------
Notwithstanding any other provision herein to the contrary, at the Effective
Time, First Financial and Merger Corp hereby expressly assume and agree to
be jointly and severally liable for the rights and obligations of, among
other things, Community and Bank under those three (3) certain Supplemental
Executive Retirement Agreements identified in this Section 7.06 below and
------------
briefly described on Schedule 4.09(a)(iv) of the Disclosure Schedule to this
--------------------
Agreement:
(i) That certain Supplemental Executive Retirement Agreement by
and between Community Bank & Trust N.A., f/k/a/ Community Bank & Trust, fsb and
Xxxxxxx X. Xxxxxxx dated as of June 22, 1995;
(ii) That certain Supplemental Executive Retirement Agreement
by and between Community Bank & Trust N.A., f/k/a/ Community Bank & Trust, fsb
and Xxxxx X. Xxxxxx dated as of June 22, 1995; and
(iii) That certain Supplemental Executive Retirement Agreement
by and between Community Bank & Trust N.A., f/k/a/ Community Bank & Trust, fsb
and Xxxxxxx X. Xxxxxxx dated as of June 22, 1995.
35
SECTION 8
CONDITIONS PRECEDENT TO THE MERGER
----------------------------------
8.01. First Financial. The obligation of First Financial to
---------------
consummate the Merger is subject to the satisfaction and fulfillment of each
of the following conditions on or prior to the Effective Time, unless waived
in writing by First Financial:
(a) Representations and Warranties at Effective Time. Each of the
------------------------------------------------
representations and warranties of Community contained in this Agreement will
be true, accurate and correct in all material respects at and as of the
Effective Time as though such representations and warranties had been made
or given on and as of the Effective Time.
(b) Covenants. Each of the covenants and agreements of Community
---------
will have been fulfilled or complied with in all material respects from the
date of this Agreement through and as of the Effective Time.
(c) Deliveries at Closing. First Financial will have received from
---------------------
Community at the Closing (as hereinafter defined) the items and documents,
in form and content reasonably satisfactory to First Financial, set forth in
Section 11.02(b) hereof.
(d) Regulatory Approvals. The appropriate banking regulators will
--------------------
have authorized and approved the Merger on terms and conditions satisfactory
to First Financial. In addition, all appropriate orders, consents, approvals
and clearances from all other regulatory agencies and governmental
authorities whose orders, consents, approvals or clearances are required by
law for consummation of the Merger contemplated by this Agreement will have
been obtained on terms and conditions satisfactory to First Financial.
(e) Shareholder Approval. The shareholders of Community will
--------------------
have approved and adopted this Agreement as required by applicable law and its
Articles of Incorporation.
(f) Officers' Certificate. Community will have delivered to First
---------------------
Financial a certificate signed by its President and its Secretary, dated as
of the Effective Time, certifying that: (i) all the representations and
warranties of Community are true, accurate and correct in all material
respects on and as of the Effective Time; (ii) all the covenants of
Community have been complied with in all material respects from the date of
this Agreement through and as of the Effective Time; and (iii) Community has
satisfied and fully complied with all conditions necessary to make this
Agreement effective as to them.
(g) Stock Options. Except for the 154,340 outstanding "in the
-------------
money" Community options to purchase shares of Community common stock
referenced in Section 2 of this Agreement, all options, warrants,
---------
commitments, calls, puts, agreements, understandings, arrangements or
subscription rights relating to any shares of Community Common Stock, or any
securities convertible into or representing the right to purchase or
otherwise acquire any common stock or debt securities of Community, by which
Community is or may become bound, will have been terminated or expired.
36
(h) Adequate Consideration and Fairness Opinion. A written opinion
-------------------------------------------
shall have been delivered to the Special Trustee of the Community ESOP by its
independent financial advisor to the effect specified in Section 6.13(b)(iii).
--------------------
Such opinion shall (i) be in form and substance satisfactory to First Financial
and its counsel, (ii) be dated as of a date not later than the mailing date of
the proxy statement-prospectus relating to the Merger to be mailed to
Community's shareholders, and (iii) updated or confirmed in writing as of the
Effective Time.
(i) Amount of Liabilities and Assets. First Financial shall have
--------------------------------
agreed to the amount of the potential tax liabilities of Community and the
amounts contemplated by Sections 2.02(b)(ii) and (iv) for purposes of
-----------------------------
determining the Aggregate Purchase Price in Section 2.02(b), and any amount
---------------
contemplated by Section 2.02(c).
---------------
(j) Director Waivers. First Financial shall have received from
----------------
each of the Directors of Community and the Bank waivers, in form and substance
satisfactory to it, of such individual's rights to seek reimbursement of or
make a claim for the expenses incurred or which may be incurred in
connection with the matters set forth in Schedule 4.26(b) of the Disclosure
----------------
Schedule.
8.02. Community. The obligation of Community to consummate the
---------
Merger is subject to the satisfaction and fulfillment of each of the following
conditions on or prior to the Effective Time, unless waived in writing by
Community:
(a) Representations and Warranties at Effective Time. Each of the
------------------------------------------------
representations and warranties of First Financial contained in this
Agreement will be true, accurate and correct in all material respects on and
as of the Effective Time as though the representations and warranties had
been made or given at and as of the Effective Time.
(b) Covenants. Each of the covenants and agreements of First
---------
Financial will have been fulfilled or complied with in all material respects
from the date of this Agreement through and as of the Effective Time.
(c) Deliveries at Closing. Community will have received from
---------------------
First Financial at the Closing the items and documents, in form and content
reasonably satisfactory to Community, listed in Section 11.02(a) hereof.
----------------
(d) Regulatory Approvals. The appropriate banking regulators will
--------------------
have authorized and approved the Merger. In addition, all appropriate
orders, consents, approvals and clearances from all other regulatory
agencies and governmental authorities whose orders, consents, approvals or
clearances are required by law for consummation of the Merger contemplated
by this Agreement will have been obtained.
(e) Shareholder Approval. The shareholders of Community will
--------------------
have approved and adopted this Agreement as required by applicable law and
Community's Articles of Incorporation.
37
(f) Officers' Certificate. First Financial will have delivered
---------------------
to Community a certificate signed by its Chairman or President and its
Secretary, dated as of the Effective Time, certifying that: (i) all the
representations and warranties of First Financial are true, accurate and
correct in all material respects on and as of the Effective Time; (ii) all
the covenants of First Financial have been complied with in all material
respects from the date of this Agreement through and as of the Effective
Time; and (iii) First Financial has satisfied and fully complied with all
conditions necessary to make this Agreement effective as to it.
SECTION 9
TERMINATION OF MERGER
---------------------
9.01. Manner of Termination. This Agreement and the Merger may be
---------------------
terminated at any time prior to the Effective Time by written notice delivered
by First Financial to Community, or by Community to First Financial, as follows:
(a) By First Financial or Community, if:
(i) the Merger contemplated by this Agreement has not
been consummated by September 30, 2001; or
(ii) the Agreement and the Merger are not approved by the
requisite vote of the shareholders of Community at
the Special Meeting of Shareholders of Community; or
(iii) the respective Boards of Directors of First
Financial and Community mutually agree to
terminate this Agreement.
(b) By First Financial if:
(i) First Financial determines in its sole discretion
that any item, event or information set forth in any
supplement, amendment or update to the Disclosure
Schedule, or the results of any environmental report
pursuant to Section 6.10, has had or could be
------------
expected to have a material adverse effect on the
business, assets, capitalization, financial condition
or results of operations of Community; or First
Financial otherwise becomes aware of any item, event
or information which it determines in its sole
discretion has had or could be expected to have a
material adverse effect on the business, assets,
capitalization, financial condition or results of
operations of Community (it being understood and
acknowledged by Community that the due diligence
review of Community by First Financial was not
complete as of the date of this Agreement); or
(ii) there has been a misrepresentation or a breach of
any warranty by or on the part of Community in its
representations and warranties set forth in this
Agreement which has had or would be expected to have
a material
38
adverse effect on the business, assets,
capitalization, financial condition or results of
operations of Community; provided, however, that in
the event of any inaccuracy in the representations
and warranties contained in Section 4.03 hereof
------------
relative to the number of issued and outstanding
shares of capital stock or options to purchase
shares of capital stock of Community or Bank, First
Financial will have the absolute right to terminate
this Agreement without regard to the materiality of
any such inaccuracy; or
(iii) there has been a breach of or failure to comply
with any covenant set forth in this Agreement by
or on the part of Community which could
reasonably be expected to have a material adverse
effect on the economic value of the Merger to
First Financial; or
(iv) First Financial shall reasonably determine that
the Merger contemplated by this Agreement has
become inadvisable or impracticable by reason of
commencement or threat of any claim, litigation
or proceeding against First Financial, Community,
or any director or officer of any of such
entities (A) relating to this Agreement or the
Merger, or (B) which is likely to have a material
adverse effect on the business, assets,
capitalization, financial condition or results of
operations of Community; or
(v) there has been a material adverse change in the
business, assets, capitalization, financial condition
or results of operations of Community as of the
Effective Time as compared to that in existence as of
December 31, 2000 other than (A) any change resulting
from the action taken by Community pursuant to
Section 6.12 or Section 6.17, (B) any change set
------------ ------------
forth on the Disclosure Schedule as of and delivered
as of the date of this Agreement, or (C) resulting
primarily by reason of changes in banking laws or
regulations (or interpretations thereof), changes in
the general level of interest rates or changes in
economic, financial or market conditions affecting
the banking industry generally in Community's market
area; or
(vi) Community's Board of Directors has failed to
approve and recommend this Agreement or the
Merger, or has withdrawn or modified in any
manner adverse to First Financial its approval or
recommendation of this Agreement or the Merger or
will have resolved or publicly announced an
intention to do either of the foregoing; or
(vii) the sale by Community for cash of all of the
shares of American Bank of Illinois in Highland,
MidAmerica Bank of St. Clair County, and The
Egyptian State Bank has not consummated by May
30, 2001.
39
(c) By Community, if:
(i) there has been a misrepresentation or a breach of
any warranty by or on the part of First Financial
in its representations and warranties set forth
in this Agreement which has had or would be
expected to have a material adverse effect on the
business, assets, capitalization of First
Financial; or
(ii) there has been a breach of or failure to comply
with any covenant set forth in this Agreement by
or on the part of First Financial or First
Financial which has had or would be expected to
have a material adverse effect on the business,
assets, capitalization, financial condition or
results of operations of First Financial; or
(iii) it shall reasonably determine that the Merger
contemplated by this Agreement has become
inadvisable or impracticable by reason of
commencement or threat of any material claim,
litigation or proceeding against First Financial
(A) relating to this Agreement or the Merger, or
(B) which is likely to have a material adverse
effect on the business, assets, capitalization of
First Financial.
9.02. Effect of Termination. Upon termination by written notice,
---------------------
this Agreement shall be of no further force or effect, and there shall be no
further obligations or restrictions on future activities on the part of
First Financial, Community and their respective directors, officers,
employees, agents and shareholders, except as provided in compliance with
the confidentiality provisions of this Agreement set forth in Section 6.07
------------
and the payment of expenses set forth in Section 12.10 hereof. Termination
-------------
will not in any way release a breaching party from liability for any willful
breach of this Agreement giving rise to such termination.
SECTION 10
EFFECTIVE TIME OF THE MERGER
----------------------------
Upon the terms and subject to the conditions specified in this
Agreement, the Merger will become effective at the close of business on the
day and at the time specified in the Articles of Merger of Community with
and into Merger Corp as filed with the Indiana and Illinois Secretaries of
State ("Effective Time"). Unless otherwise mutually agreed to by the parties
hereto, the Effective Time will occur on the last business day of the month
following (a) the fulfillment of all conditions precedent to the Merger set
forth in Section 8 of this Agreement and (b) the expiration of all waiting
---------
periods in connection with the bank regulatory applications filed for the
approval of the Merger.
40
SECTION 11
CLOSING
-------
11.01. Closing Date and Place. So long as all conditions precedent
----------------------
set forth in Section 8 hereof have been satisfied and fulfilled, the closing
---------
of the Merger ("Closing") will take place on the Effective Time at a
location to be reasonably determined by First Financial.
11.02. Deliveries. (a) At the Closing, First Financial will deliver
----------
to Community the following:
(i) the officers' certificate contemplated by
Section 8.02(g) hereof;
---------------
(ii) copies of all approvals by government regulatory
agencies necessary to consummate the Merger;
(iii) copies of the resolutions of the Board of
Directors of First Financial and Merger Corp
certified by the Secretary of First Financial and
Merger Corp, respectively, relative to the
approval of this Agreement and the Merger; and
(iv) such other documents as Community or its legal
counsel may reasonably request.
(b) At the Closing, Community will deliver to First Financial
the following:
(i) an opinion of its legal counsel in the form attached
hereto as Exhibit A and dated as of the Effective
Time;
(ii) the officers' certificate contemplated by
Section 8.01(f) hereof;
---------------
(iii) a list of Community's shareholders as of the
Effective Time certified by the President and
Secretary of Community;
(iv) copies of the resolutions adopted by the Board of
Directors and shareholders of Community certified by
the Secretary of Community relative to the approval
of this Agreement and the Merger;
(v) such other documents as First Financial or its legal
counsel may reasonably request; and
(vi) the Fairness Opinion required by Sections 8.01(h)
----------------
and 8.02(h) hereof; and
-------
41
SECTION 12
MISCELLANEOUS
-------------
12.01. Effective Agreement. This Agreement will be binding upon and
-------------------
inure to the benefit of the respective parties hereto and their respective
successors and assigns; provided, however, that this Agreement may not be
assigned by any party hereto without the prior written consent of the other
parties hereto; provided, however, that no such extension, waiver or
amendment agreed to after authorization of this Agreement by the
shareholders of Community will affect the rights of such shareholders in any
manner which is materially adverse to such shareholders. The
representations, warranties, covenants and agreements contained in this
Agreement are for the sole benefit of the parties hereto and their
successors and assigns, and they will not be construed as conferring any
rights on any other persons.
12.02. Waiver; Amendment. (a) The parties hereto may by an
-----------------
instrument in writing: (i) extend the time for the performance of or
otherwise amend any of the covenants, conditions or agreements of the other
parties under this Agreement; (ii) waive any inaccuracies in the
representations or warranties of the other parties contained in this
Agreement or in any document delivered pursuant hereto or thereto; (iii)
waive the performance by the other parties of any of the covenants or
agreements to be performed by it or them under this Agreement; or (iv) waive
the satisfaction or fulfillment of any condition, the nonsatisfaction or
nonfulfillment of which is a condition to the right of the party so waiving
to consummate the Merger. The waiver by any party hereto of a breach of or
noncompliance with any provision of this Agreement will not operate or be
construed as a continuing waiver or a waiver of any other or subsequent
breach or noncompliance hereunder.
(b) This Agreement may be amended, modified or supplemented only
by a written agreement executed by the parties hereto.
12.03. Notices. All notices, requests and other communications
-------
hereunder will be in writing (which will include telecopier communication)
and will be deemed to have been duly given if delivered by hand and
receipted for, sent by certified United States Mail, return receipt
requested, first class postage pre-paid, delivered by overnight express
receipted delivery service or telecopied if confirmed immediately thereafter
by also mailing a copy of such notice, request or other communication by
certified United States Mail, return receipt requested, with first class
postage pre-paid as follows:
42
If to First Financial: with a copy to (which will not
constitute notice):
First Financial Corporation Xxxxx XxXxxxx Xxxxxxxxx & Xxxxxxxx
One First Financial Plaza One Indiana Square, Suite 2800
XX Xxx 000 Xxxxxxxxxxxx, Xxxxxxx 00000-0000
Xxxxx Xxxxx, Xxxxxxx 000000 ATTN: Xxxx X. Xxxxxxxx, Esq.
ATTN: Xxxxxxx X. Xxxxx, CFO and Secretary Telephone: (000) 000-0000
Telephone: (000) 000-0000 Telecopier: (000) 000-0000
Telecopier: (000) 000-0000
If to Community: with a copy to (which will not
constitute notice):
Community Financial Corp. Xxxxxxxx Xxxxxx LLP
000 X. Xxxxxxxx Xxxxxx Xxx Xxxxxxx Xxxxx
Xxxxx, Xxxxxxxx 00000-0000 Xx. Xxxxx, Xxxxxxxx 00000
ATTN: Xxxxx X. Xxxxxx, President ATTN: Xxxxxx X. Xxxxxxx, Xx.
Telephone: (000) 000-0000 Telephone: (000) 000-0000
Telecopier: (000) 000-0000 Telecopier: (000) 000-0000
or such substituted address or person as any of them have given to the other
in writing. All such notices, requests or other communications will be
effective: (a) if delivered by hand, when delivered; (b) if mailed in the
manner provided herein, five (5) business days after deposit with the United
States Postal Service; (c) if delivered by overnight express delivery
service, on the next business day after deposit with such service; and (d)
if by telecopier, on the next business day if also confirmed by mail in the
manner provided herein.
12.04. Headings. The headings in this Agreement have been inserted
--------
solely for ease of reference and should not be considered in the interpretation
or construction of this Agreement.
12.05. Severability. In case any one or more of the provisions
------------
contained herein will, for any reason, be held to be invalid, illegal or
unenforceable in any respect, such invalidity, illegality or
unenforceability will not affect any other provision of this Agreement, but
this Agreement will be construed as if such invalid, illegal or
unenforceable provision or provisions had never been contained herein.
12.06. Counterparts. This Agreement may be executed in any number
------------
of counterparts, each of which will be an original, but such counterparts will
together constitute one and the same instrument.
12.07. Governing Law. This Agreement will be governed by and
-------------
construed in accordance with the laws of the State of Indiana and applicable
federal laws, without regard to principles of conflicts of law.
43
12.08. Entire Agreement. This Agreement and the Exhibits hereto
----------------
supersede all other prior or contemporaneous understandings, commitments,
representations, negotiations or agreements, whether oral or written, among
the parties hereto relating to the Merger or matters contemplated herein and
constitute the entire agreement between the parties hereto, except as
otherwise provided herein. Upon the execution of this Agreement by all the
parties hereto, any and all other prior writings of either party relating to
the Merger will terminate and will be rendered of no further force or
effect. The parties hereto agree that each party and its counsel reviewed
and revised this Agreement and that the normal rule of construction to the
effect that any ambiguities are to be resolved against the drafting party
will not be employed in the interpretation of this Agreement or any
amendments or exhibits hereto.
12.09. Survival of Representations, Warranties or Covenants. Except
----------------------------------------------------
as set forth in the following sentence, none of the representations,
warranties or covenants of the parties will survive the Effective Time or
the earlier termination of this Agreement, and thereafter First Financial,
Merger Corp, Community, and all the respective directors, officers and
employees of First Financial, Merger Corp and Community will have no further
liability with respect thereto, except for fraud or except as otherwise
provided by law, whether statutory, common law or otherwise. The covenants
contained in Sections 6.07 (regarding confidentiality), 9.02, 12.08, 12.09
-------------------------------------------------------------
and 12.10 shall survive termination of this Agreement. The covenants
---------
contained in Sections 6.07 (regarding confidentiality), 12.08, 12.09 and
-----------------------------------------------------------
12.10 shall survive the Effective Time.
-----
12.10. Expenses. Each party to this Agreement shall pay its own
--------
expenses incidental to the Merger contemplated hereby.
12.11. Certain References. Whenever in this Agreement a singular
------------------
word is used, it also will include the plural wherever required by the
context and vice-versa. Except expressly stated otherwise, all references in
this Agreement to periods of days shall be construed to refer to calendar,
not business, days. The term "business day" will mean any day except
Saturday and Sunday when Terre Haute First National Bank in Terre Haute,
Indiana, the lead bank of First Financial, is open for the transaction of
business.
12.12. Disclosure Schedule. The Disclosure Schedule attached hereto
-------------------
is intended to be and hereby is specifically made a part of this Agreement.
44
IN WITNESS WHEREOF, First Financial, Merger Corp and Community have
made and entered into this Agreement as of the day and year first above
written and have caused this Agreement to be executed, attested in
counterparts and delivered by their duly authorized officers.
FIRST FINANCIAL CORPORATION
By: /s/ Xxxxxx X. Xxxxx
----------------------------------------
Xxxxxx X. Xxxxx, Chairman of the Board
and President
/s/ Xxxxxxx X. Xxxxx
-------------------------------
Xxxxxxx X. Xxxxx, Secretary
FFC MERGER CORP
By: /s/ Xxxxxx X. Xxxxx
----------------------------------------
Xxxxxx X. Xxxxx, Chairman of the Board
and President
/s/ Xxxxxxx X. Xxxxx
-------------------------------
Xxxxxxx X. Xxxxx, Secretary
COMMUNITY FINANCIAL CORP.
By: /s/ Xxxxx X. Xxxxxx
----------------------------------------
Xxxxx X. Xxxxxx, President
/s/ Xxxxx Xxxxxx
-------------------------------
Xxxxx Xxxxxx, Secretary
45
